Kenya’s stock of public debt hit Sh13 trillion in June this year and continues to draw scrutiny from across the board. The concerns vary from whether the debt is sustainable to trillions of shillings which were allegedly acquired without parliamentary approval and that some of the loans cannot be tied to any meaningful projects.
The scrutiny is understandable considering the seemingly insatiable appetite by the government to take loans over the last one and a half decades. In 2013, when the Jubilee administration took over, public debt stood at Sh1.8 trillion and skyrocketed to Sh8.7 trillion by 2022. This has since grown by more than Sh4.3 trillion over the last four years of the Kenya Kwanza regime, translating to borrowing of Sh4 billion a day.
The debts acquired over the years are now having a major impact on Kenya’s budget, which extends to limited opportunities for Kenyans to earn a living. The government cannot provide essential services for its people, despite saddling them with heavy taxes.
According to Treasury documents, debt servicing has been gobbling up about Sh7 out of every Sh10 that the Kenya Revenue Authority collects in taxes.
Such details on debt and how it has grown might not click with many Kenyans. But it is because of the high debt service levels that public hospitals across the country might not have enough medicine and patients have to pay out of pocket for their medication. High debt service has also meant that the government has fewer resources for education, provision of water and even building roads and other infrastructure.
In a nutshell, President Ruto’s – as well as his predecessors’ – careless borrowing has ensured that Kenyan children pay dearly today through lack of quality education, healthcare and other essentials. In future, these children will have to pay taxes that will be used to repay the costly loans that today stand at Sh13 trillion.
Dr Ruto came into office with the promise of going easy on debt. In fact, he criticised President Uhuru Kenyatta's borrowing appetite and promised to move the country away from debt-driven growth. Ruto had been a crusader for Kenya living within its means and promised a tightening of belts, which he said he would lead by example.
In the four years he has been in office, Ruto has done little, if anything, to tame borrowing. His administration appears to be resisting calls to cut spending, especially on non-essentials. This failure to reduce expenditure has always had the impact of growing the budget deficit every year, a gap that has always been filled through borrowing. Worse is that while it has maintained fast-paced borrowing, Kenya Kwanza has been heavily borrowing from the domestic market, which has come with the risk of crowding out businesses and households from the loan market.
While borrowing appears to be inevitable, it is only prudent for the Treasury to relook how it goes about acquiring loans. In its own plans, it has detailed how it will refrain from commercial debt in favour of concessional loans, reduce borrowing through short-term Treasury Bills and reduce the budget deficit from 5.5 per cent of the Gross Domestic Product to 3.2 per cent by trying to live within its own means. We must begin to live within our own means or forever become slaves of debt.
