The country’s debt hit Ksh.7.7 trillion in June this year according to new data from the National Treasury and the Central Bank of Kenya (CBK).
In contrast, the stock of Kenya’s debt stood at a lower Ksh.6.7 trillion at the same time last year.
This means that the country has added at least Ksh.1 trillion to its debt stock over the last 12 months in a period which has seen an uptick of loan disbursements to Kenya.
According to the new data, Kenya’s external debt crossed the Ksh.4 trillion mark at the end of June while domestic debt hit Ksh.3.7 trillion.
Nevertheless, the new debt stock aligns to projects by the National Treasury which are contained in the 2021 final Budget Policy Statement (BPS).
The budget paper saw the debt stock at Ksh.7.66 trillion at the end of June this year to comprise of Ksh.3.9 trillion in external debt and Ksh.3.7 trillion in local debt.
In the BPS, Treasury backs a mix of expenditure prioritization and greater revenue mobilization to cure runaway debt and return the country to a fiscal consolidation path.
“To achieve this target, the government will continue to restrict growth in recurrent spending and double its effort in domestic resource mobilization. The government has also been cutting down on non-priority sectors in order to manage the public wage bill,” said Treasury.
At present a reforms program with backing from the International Monetary Fund (IMF) is expected to steer fiscal consolidation efforts with the exchequer already pushing for the restructure of 18 key State Corporations (SCs) among them public universities and ailing parastatals.
Nevertheless, the most up to date Treasury documents still project greater debt into the medium term.
For instance, the 2021 BPS expects the stock of public debt to rise to Ksh.8.6 trillion by June next year and to Ksh.9.4 trillion in the subsequent fiscal year.
In June of 2024, public debt is project to hit double digits at a flat Ksh.10 trillion before expanding further to Ksh.10.6 trillion by June 2025.
The stock of debt will be at this time well above the Ksh.9 trillion threshold set by Parliament.
It is for this reason that the exchequer is expected to appeal for a higher debt ceiling to at least Ksh.12 trillion.
This is despite the previous review coming in only at the end of 2019.
The National Treasury has backed the ceiling expansion as an enabler to debt restructuring even as the credibility of the process remains in doubt.
Further debt control measures proposed are not full proof.
For instance, greater revenue mobilization is exposed to COVID-19 after shocks as the global health pandemic continues to evolve to include the possibility of a return to stricter and enterprise curbing restrictions.
While the government has set an ambitious mass vaccination campaign with the aim of fully inoculating 26 million adults by June next year, the initiative have been slow off the starter blocks with complexities such as vaccine unavailability.
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