To compound the challenge, the government has been experiencing a slump in revenue collection both in 2017/18 and the current financial year, forcing it to slash its Sh3.026 trillion budget for the current financial year by Sh37 billion.
The government has also increased taxes on basic commodities to finance its recurrent and development priorities, raising the cost of living and threatening the country’s competitiveness in the manufacturing sector and the cost of doing business in the region.
Mr Rotich was upbeat about the debt situation, saying it is within sustainable levels. He sought to assure the country that during the 2017/18 financial year, Kenya’s public debt remained below the 50 per cent Gross Domestic Product.
As at the end of June this year, the outstanding total public debt, including what was publicly guaranteed, stood at Sh5.04 trillion compared to Sh4.4 trillion in 2017, while in 2017/18 it stood at Sh460.1 billion with external service standing at Sh220.6 billion and domestic at Sh239.5 billion.
Leader of minority in the National Assembly John Mbadi said the debt is risky to the economy and urged the government to cushion the poor against the high cost of living.
“Definitely something has to be done to check the levels of borrowing and ensure that the money is put where it is intended. You cannot borrow to pay salaries and later increase the taxes on the poor,” Mr Mbadi said.
The report notes that domestic debt increased from Sh2.1 trillion in 2017 to Sh2.5 trillion in June 2018, which is 49.1 per cent of the national debt.
External debt, which includes what has been guaranteed, increased by 12 per cent from Sh2.3 trillion in June 2017 to Sh2.6 trillion in June 2018 representing 50.9 per cent of the total public debt.