Kenya’s Treasury to Continue Borrowing Amid Rising Debt Concerns

Despite a debt of Sh11.2 trillion, Kenya’s National Treasury will continue borrowing to sustain government operations, according to Cabinet Secretary John Mbadi. This decision responds to a pressing fiscal crisis exacerbated by declining revenues and external support. The government aims to implement a revised borrowing strategy and enhance the effective use of public funds.

Kenya’s National Treasury, led by Cabinet Secretary John Mbadi, has announced that despite the country’s escalating debt of Sh11.2 trillion and a debt-to-GDP ratio of 65.7%, borrowing will continue. This decision was communicated during a Senate Finance and Budget Committee meeting, where Mr. Mbadi underscored that such borrowing is fundamental for maintaining ongoing government operations.

The fiscal crisis has been exacerbated by protests led by Generation Z, which forced the withdrawal of the Finance Bill, resulting in a revenue shortfall of Sh346 billion. In light of these challenges, Mr. Mbadi acknowledged the eroded trust in President William Ruto’s administration but assured that measures to enhance resource utilization are underway.

The government’s revised borrowing strategy includes Sh684.2 billion from domestic markets and Sh146.8 billion externally for the financial year ending June 2026, adjusting to a decline in IMF support. The Kenya Revenue Authority is tasked with raising Sh1.07 trillion in revenues amid increasing pressure on its collection capacities.

Mr. Mbadi expressed concerns regarding a Sh42 billion loan acquired shortly after the recent elections, questioning its necessity given the impending administrative transition. He also highlighted that Sh1.3 trillion remains allocated but undisbursed across various functions, urging ministries to prioritize essential areas of expenditure.

Senator Boni Khalwale questioned the retention of Sh29.9 billion intended for devolved functions, but Mr. Mbadi deferred his response pending a review. He emphasized the need for a political resolution regarding the Road Maintenance Levy Fund to ensure continued county service delivery, while also apologizing for previous absences at Senate meetings due to engagements with IMF and Cabinet sessions.

In conclusion, Kenya’s Treasury is poised to continue its borrowing strategy to address operational needs despite a significant debt burden. The government must tackle rising fiscal challenges, enhance public resource management, and reassure citizens regarding the utility of borrowed funds. Ongoing dialogues in the Senate regarding budget allocations and the implications for service delivery exemplify the complexities of navigating the current financial landscape.

Original Source: eastleighvoice.co.ke