Kenya’s debt up record Sh1.56 trillion

Kenya borrowed the largest amount of money in a single year during President William Ruto’s first year in office, pushing the debt levels past the ceiling amid shortfalls in tax collections and increased repayment obligations.

Gross debt stock climbed Sh1.56 trillion for the financial year ended June, fresh data released by the Treasury shows, breaching the Sh10 trillion mark by Sh189.53 billion.

Kenya ended the last financial year in June with a gross total debt load of Sh10.19 trillion, a growth of 18.08 percent over Sh8.63 trillion a year ago, which was the last full fiscal year for former President Uhuru Kenyatta.

Lawmakers in June voted to convert the numerical debt ceiling to an anchor of 55 percent of gross domestic product (GDP), with the Treasury given five years to comply.

The jump in gross debt came in a fiscal year Dr Ruto, who was in charge for nine of the 12 months under review, made it clear his administration would cut borrowing.

Nearly Sh1.43 trillion, or 91.52 percent, of the new gross debt, was contracted in the last nine months of the year under review, according to the Treasury data.

Dr Ruto, who partly rode to power on a pledge to make debt a “last resort” in raising funds to plug holes in the budget, had pledged not to make the nation “slaves of debt from any place or any country”.

He vowed to pursue policies, which enhance tax compliance levels and grow national savings from a measly “seven” percent of GDP towards 30 percent envisioned in Kenya’s long-term development blueprint, Vision 2030.

“I am looking forward to the day, soon enough, when we borrow from the savings of the people of Kenya to run our development instead of borrowing from other countries, and that is what holds the future for us,” Dr Ruto had said last September ahead of being sworn into office.

“I am encouraging the people of Kenya as we work together to get our economy out of the mud… that each and every one of us must pay their taxes and I am going to lead from the front, making sure I pay my taxes.”

Provisional official data, however, suggests the Ruto administration’s fiscal consolidation plan was roiled by underperformance in the main tax streams, which missed the Sh2 trillion by Sh112.76 billion in an environment of a softening economy.

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