This archive report was first published on 10 October 2019.
On October 10, 2019, the Kenyan government announced plans to raise the public debt ceiling to Sh9 trillion by 2023, sparking concerns about the country's financial stability.
According to the acting Treasury Cabinet Secretary, maintaining the current debt cap would hinder the government's ability to deliver its budget goals. However, the Budget and Appropriations Committee chairman in Parliament countered that the country has already surpassed its debt ceiling.
As the public debt repayment continues to gobble up billions of shillings each year, the debt-to-GDP ratio has risen significantly from 42 percent in 2013 to 55 percent in 2019.
The law restricts State borrowing to half the Gross Domestic Product (GDP), but the new space offered by Parliament on Wednesday will allow the Treasury to borrow up to another Sh3 trillion come July 2023, from the current Sh5.8 trillion.
Debt is not free money, and the repayments are already consuming more than half of the total revenues collected. In the year to June, the Treasury spent Sh826.20 billion on repayments against the Sh1.49 trillion collected.
Kenya's salvation lies in reducing wastage spawned by runaway corruption and prioritizing expenditure. Allowing the country to borrow with abandon will only feed the ego of the demonstration effect seen in grandiose infrastructural works while the economy is stagnant and the taxpayer is trapped.
