PUBLIC DEBT REPAYMENT HITS US$1BN FOR FIRST TIME
NAIROBI - Repayment of public debt will for the first time cross the US$1 billion mark from July, underlining the burden of mounting government borrowing.
The Treasury in February disclosures to Parliament show that it will pay US$1.023 billion for loans in the year starting July, making it the single-largest expenditure and more than double the US$435.7 billion that taxpayers paid for debt four years ago.
At US$1.023 billion, Kenya will require an average of
US$2.8 million daily in the financial year when the repayment of principal sums of a majority of the commercial and semi-concessional loans fall due.
The Jubilee administration has ramped up borrowing in recent years to build a range of infrastructure projects, leading to a squeeze on its finances as the loans fall due just as the economy is reeling from the impact of the coronavirus crisis.
Kenya will use Sh5.76 for every Sh10 collected as taxes and other levies in the year starting July for debt payments, leaving little cash for building and maintenance of roads, revamping the rickety health sector, boosting food security and affordable housing.
Kenyatta administration will have borrowed at least US$7.6 brillion to implement his manifesto in the 10 years of power after inheriting slightly more than US$1.89 brillion in June 2013 from the Kibaki government.
Treasury chiefs project in the Budget Policy Statement released this month that total debt will jump to US$8.59 billion in the year ending June 2022, less than two months before the end of President Uhuru Kenyatta final term.
Several local and international agencies, including the IMF and World Bank, have expressed concern over Kenya’s rising appetite for borrowing to finance state expenditure.
The Parliamentary Budget Office - a technical unit that advises lawmakers on financial and economic matters - says “debt repayment may be crowding out development expenditure.” - BUSINESS DAILY AFRICA.