Kenya’s public debt is growing at a rate that by far exceeds forecasts by Parliament and the Executive.
Projections now indicate the worrying trend could see the country’s debt burden account for close to 130 per cent of Gross Domestic Product (GDP) by 2030.
Though the Parliamentary Budget Office (PBO) projects that public debt will account for 100 per cent of the GDP by 2030, going by trends set by the Jubilee administration over the past eight years and putting particular focus on the past year since the onset of the Covid-19 pandemic, arithmetically Kenya’s public debt will be more than Sh22 trillion in the next decade.
In January this year, the PBO, in its Debt Stock Analysis and Forecast, revised its September 2020 projections upwards, indicating the country’s debt will have shot up to Sh7.8 trillion by the end of June (from September’s figure of Sh7.5 trillion), be about Sh9 trillion by June next year and hit Sh10 trillion by June 2023.
"This trend is projected to continue over the medium term as the expansionary economic blueprint, the need for fiscal stimulus and debt servicing obligations continue to drive expenditures even as revenue generation remains low and the economy continues to underperform," PBO stated.
Public debt
The parliamentary budget agency’s forecast is that public debt will account for 69 per cent of the GDP and 87 per cent of total debt ceiling in the current FY, while debt stock will double by 2030 to account for 100 per cent of GDP.
The office goes further to project that public debt will increase by about or more than Sh1 trillion from 2023 up to 2030, when Kenya will have a debt burden of about Sh17.5 trillion, equivalent to 100 per cent of the GDP.
"Debt repayment expenditure, estimated at Sh925 billion in FY 2020/21, will reach Sh1.023 trillion by the end of FY 2021/22. To manage this situation, lengthening the maturity of existing securities may be necessary even though this will transfer debt to future generations," the office further warns.
But the projections by PBO and the Treasury could still be inaccurate, going by past realities where government’s borrowing has always surpassed prior estimates and forecasts.
Between June 2013 when the Jubilee government took over the country’s leadership and June 2020, Kenya’s public debt had risen by 254 per cent, moving from Sh1.89 trillion to Sh6.69 trillion.That figure dramatically changes to a rate of about 297 per […]
