This archive report was first published on 31 October 2019.
As of June, Kenya's public debt stood at Ksh.5.89 trillion, a significant increase from Ksh.5.03 trillion.
According to the National Treasury, the country's fiscal deficit has shot up to 7.7 percent, surpassing the projected target of 6.8 percent for the 2018/19 fiscal year.
The World Bank has called for credible adjustment measures to place fiscal accounts back on the 'fortification path.'
World Bank Kenya Chief Economist Peter Chacha emphasized the importance of fiscal consolidation, stating, 'Fiscal consolidation should be an outcome of a realistic revenue projection and a well-anchored expenditure position to ensure our debt remains sustainable.'
Chacha also recommended capacity building in the Public Debt Management Office (PDMO) to evaluate the debt portfolio and make necessary interventions to contain debt.
Despite the government's austerity measures, the fiscal situation remains precarious, with the Treasury indicating plans to review downwards Kenya Revenue Authority (KRA) targets for the financial year.
The KRA has faced challenges in implementing revenue-yielding measures, including withholding taxes on winnings, resulting in a significant shortfall in income taxes.
As the government faces the immediate squeeze of debt servicing obligations, the World Bank has recommended recalibrating all debt towards longer and cheaper terms, which would require the government to sink back into the debt market.
However, independent analysts remain puzzled on Kenya's qualification for cheap funding in its post-low-middle-income status gain, recommending a hold on fiscal containment.
