President William Ruto’s administration has borrowed Sh17.4 billion more than his predecessor in its first six months in office, upending the plan to go slow on debt.
Treasury data shows that the new administration tapped loans worth Sh452 billion in the six months to March, which is more than the Sh434.6 billion that its predecessor borrowed in the same period a year earlier.
Analysts had expected that the Ruto administration would cut fresh borrowing by a larger margin after committing to ramping up its tax collections.
But the rise in spending under the Bottom-Up economic plan, which proposes to channel resources to sectors that can have a massive impact in creating jobs and wealth, has prevented deeper cuts on the country’s borrowing.
Dr Ruto faces a narrow fiscal space to roll out his policies after his predecessor, Uhuru Kenyatta, increased public borrowing to fund infrastructure projects.
Kenya’s debt increased more than four-fold to Sh8.66 trillion under Dr Ruto’s predecessor, who invested heavily in new rail links and other infrastructure.
The surge in liabilities left the country at high risk of debt distress, according to the International Monetary Fund. Kenya has insisted it cannot default on its debt repayment obligations.
The increase in debt uptake came in a review period that saw the State cut both recurrent and development spending.
Recurrent spending dropped by Sh4 billion to Sh542.6 billion when the Ruto and Kenyatta presidencies are compared while development expenditure fell by Sh32.7 billion to Sh106.7 billion.
But the six months have seen the Ruto administration commit more cash to loan repayments, underlining the burden of the ballooning public debt.
Kenya paid Sh578.4 billion to service debt in the first six to March compared to Sh501 billion in a similar period a year earlier during the Kenyatta era.
Dr Ruto earlier said the government should never borrow to finance recurrent expenditure, adding the market could not sustain that kind of borrowing.
Recurrent expenditure normally includes civil servant salaries, domestic and foreign travel, and fuel costs for the government’s fleet of vehicles.
In the six months, Dr Ruto's team raised Sh928.1 billion in taxes compared to his predecessor’s Sh866.3 billion.
→ tnyabera@ke.nationmedia.com
No comments:
Post a Comment