President Uhuru Kenyatta will accumulate nearly Sh2.13 trillion in more national debt by the time his final term ends in August 2022, Treasury projections show, signalling increased pressure on taxpayers’ funds.
Treasury chiefs project in a draft Budget Review and Outlook Paper that the total debt will jump to nearly Sh7.17 trillion in the year ending June 2022, from nearly Sh5.04 trillion in June this year.
If that comes to pass, Mr Kenyatta will have contracted at least Sh5.27 trillion debt to implement his manifesto in 10 years in power after he inherited slightly more than Sh1.89 trillion in June 2013.
The Jubilee administration has increased spending since 2013 to build much-needed new roads, a modern railway, bridges and electricity plants, driving up borrowing to plug the budget deficit.
The increased debt has seen Kenya commit more than half of its taxes to repaying loans, leaving the State with little cash for building roads, affordable housing and a shot in the arm for the ailing health sector.
The public debt stood at Sh5.04 trillion in June 2018, up from Sh4.41 trillion in June 2017, Sh3.62 trillion in June 2016, Sh2.83 trillion in June 2015, Sh2.37 trillion in June 2014 and Sh1.89 trillion in June 2013.
Mr Jibran Qureishi, a regional economist for Stanbic Bank, said growth in public debt had partly been driven by over-budgeting, leading to ambitious tax targets that had largely been missed.
The projected collection figures, he added, had increased the government’s appetite to continue spending without corresponding impact on economic growth.
“When you do that (have ambitious revenue targets) from the beginning, you feel like you have enough room for manoeuvre when it comes to expenditure, but reality is you are not going to achieve that tax number,” Mr Qureishi said.
“By the time you realise that you have already spent quite a bit. This has been a problem for about six fiscal years.”
The growth in the public debt has raised concern that the ballooning repayment costs are hurting economic activities by taking up a large chunk of government revenue.
Treasury Cabinet Secretary Henry Rotich plans to spend Sh870.5 billion on debt repayments up to June next year, from Sh435.7 billion for the year ended June 2018 against expected taxes of Sh1.76 trillion.
Mr Kenyatta will leave office in August 2022 if the presidential poll outcome will not be disputed.
For the period to June this year, foreign commercial banks accounted for 37.85 per cent (Sh968.9 billion) of the Sh2.56 trillion external debt.