New debt chief must urgently get Kenya out of the borrowing spree
The latest revelations that Kenya is scheduled to repay debts amounting to Sh1.4 trillion between January and December 2019 are chilling and set to dampen any growth trajectory. Faced with a growing debt load, which has increased by nearly a trillion shilling in one year, President Uhuru Kenyatta has aggressively instituted austerity measures negatively impacting on the implementation of 545 major projects.
Counties too, have been hit hard by a shortage of development resources. In the first three months of the current financial year ending June, more than half of the 47 counties did not put a single cent into development with the chairman of Council of Governors insisting that the Treasury had closed the cash for capital spending in the counties. Even if the Treasury is going to refinance - borrow to repay - much of the maturing debt, Kenyans need to know how their country found itself in a debt trap that is now threatening economic growth.
Indeed a recent report has shown that while our peers in the East Africa Community - Uganda and Tanzania - are busy setting up mega projects, ours have stalled. Debt repayment is sucking up all the money meant for development. If the Treasury was to retire all its maturing debt, for every Sh100 that hits the Government coffers from taxes, loans and grants, Sh95 would go to creditors leaving the Treasury with only Sh5 to run operations - pay salaries, run hospitals and schools, build roads and dams and release funds to the 47 counties.
This should not have been allowed to happen. It should not happen again. That is why former Central Bank Deputy Governor Haron Sirma, who recently took up the reins as the National Treasury’s Debt Management Office, has his work cut out.
SEE ALSO :CBK says Kenya has room to refinance debt
Besides doing a thorough audit of the country’s debt portfolio to ascertain that taxpayers are getting value for money, the new head of the debt office should prevent a repeat of this mess. He must roll up his sleeves and cut Kenya’s growing appetite for borrowing. This is the time to act decisively and prudently.
National DebtBorrowingNational TreasuryDebtPresident Uhuru Kenyatta