Kenya could struggle to meet its public debt obligations as more
long term loans mature this year, economists at the African Development
Bank (AfDB) have said, in what appears to be a veiled warning against
the borrowing frenzy.
The government has increasingly
used loans to patch up its tax revenue shortfall as it continues with
its race to, among other things, modernise railway lines, expand roads
and upgrade sea ports.
The National Treasury is setting
aside Ksh658.2 billion ($6.3billion) for loans repayment in 2017/18
alone, the single-largest public expenditure item.
“Continued
high public consumption expenditure keeps the budget deficit at close
to 10 per cent of GDP, while the expected maturity of public debt could
lead to debt distress,” the AfDB economists warn in the bank’s 2018
African economic outlook.
The Kenya Revenue Authority
is expected to collect tax revenues amounting Ksh1.44 trillion ($14
billion) in the period to June, meaning 45 per cent of ordinary revenue
will go towards debt settlement.
Alarming rate
The public debt has ballooned at an alarming rate, reaching
Ksh4.48 trillion ($43.6 billion) in September, up from Ksh3.5 trillion
($34 billion) in March 2015 and Ksh2.1 trillion ($20.4 billion) in
November 2013.
Despite the concern of high debt levels,
drought and prolonged presidential election of 2017, the AfDB sees
economy rebounding to GDP growth of 5.6 per cent in 2018 and 6.2 per
cent in 2019.
“Kenya’s economy remains resilient due to
its diversity and services contributed the highest proportion to GDP
growth,” says AfDB economists in their update.
“Although
not conclusively assessed, interest rate caps have reportedly
constrained credit expansion, leading to reduced private sector
investment.”
No comments :
Post a Comment