Debt weighs down Kenya’s economic growth outlook
What you need to know:
- This year’s report shows that Kenya scored 43.0 points in terms of economic quality, down from 43.8 points in 2010.
- The report paints a grim picture of Kenya’s fiscal sustainability, where all aspects of economic resilience have been failing.
The swelling public debt, dwindling savings and a plunge in government integrity have weighed down Kenya’s economy over the past decade.
The country has been ranked at position 108 out of 167 for economic quality globally, four points down from the number 104 in 2010. This is according to the Legatum Prosperity Index, which measures countries’ changes in prosperity overtime.
“Although the world has changed, how prosperity is generated and perpetuated within a nation is unchanged. While many nations continue to grapple with the social, economic and health impacts of Covid-19, choices need to be made that are likely to have longer-term consequences,” said Dr Stephen Brien, director of policy at the Legatum Institute.
This year’s report shows that Kenya scored 43.0 points in terms of economic quality, down from 43.8 points in 2010.
The report paints a grim picture of Kenya’s fiscal sustainability, where all aspects of economic resilience have been failing.
For instance, the government’s budget balance dropped from -4.3 per cent in 2010 to -7.8 per cent. Public debt rose from 41.5 per cent to 60.1 per cent. And gross savings reduced from 14.5 per cent to 9.2 per cent.
In 2010, Kenya ranked at position 92 in terms of budget balance, but today it is at number 159 out of the 167 countries, already in the red mark. This means that even though the government’s spending continues to grow, its revenues cannot match because most of the money is being used to service debts.
Kenya’s overall fiscal sustainability dropped from 49.4 points to 35.9, as Kenya is now ranked 148 from position 109 in 2010. The government integrity dropped as independent and non-governmental checks on its powers weakened during the period.
However, Kenya scored better in terms of overall prosperity, which measured aspects of Inclusive Societies, Open Economies and Empowerment of People. Overall, Kenya ranked at position 113 out of the 167 countries that were assessed, scoring 51 points, up from position 121 and 46 points in 2010.
“The Index reveals that, prior to the pandemic, global prosperity stood at a record high, with 147 out of 167 countries seeing prosperity rise over the last decade, driven by improved health, education, and living conditions, and more open economies,” the report released on Monday stated.
All regions had seen an improvement in education in the last 10 years, with people starting education earlier and continuing later in life, researchers observed.
The report, which assessed the overall performance between 2010 and 2020 pre-Covid-19 times poked holes on the country’s governance system and its lack of accountability, which seems to be failing the other performing sectors of life.