Almost all the revenue collected in the past nine months in the country went into repaying debt, new data shows.
Figures by the National Treasury show that over the period, tax collections hit Sh900 billion against a debt repayment of Sh870 billion, leaving just Sh30 billion for the Exchequer.
This means that while revenue for the nine months to February was 96 per cent, for every Sh100 collected, debt took up Sh96.
It would also mean the country would barely meet its basic expenditure if we were to honour all its debt obligations.
Debts, pensions and salaries of top State officials for the year stood at Sh963 billion which means that for the nine months Kenyans almost exclusively worked for these sections of the budget, with nothing left to pay public service wages or to fund education, health and other development.
At Sh900 billion, the tax revenue is sure to fall short of the taxman’s Sh1.6 trillion target, translating in a wider budget deficit and more borrowing to plug the gap.
The Government plans to issue a Eurobond mid next month to settle part of the loans that fall due to avoid making payments from the exchequer.
“We have been talking to investors who say Treasury has prepared the documents and will probably start the Eurobond roadshow mid-April,” a source told The Standard in confidence.
So far, Treasury has paid off Sh413 billion out of the expected Sh870 billion due this financial year ending June.
For the 12 months between January and December, the country faces a mountain of dollar debts, including two syndicated loans, a Eurobond and the loan for the Standard Gauge Railway which is expected to cost more than the country can collect in the period.
Kenya is expected to repay debts amounting to Sh1.4 trillion between January and December this year, pointing to a looming cash crisis.
The total debt stood at Sh5.3 trillion as of June last year, up from 4.4 trillion the previous year.
Central Bank Governor Dr Patrick Njoroge said last year, Debt to GDP touched 56.6 per cent, meaning the country owes more than half of all the goods and services produced over the period.
“We made a point here that there is scope for improvement, including refinancing with longer and cheaper debt which is standard practice. The dynamics here need to be anchored on fiscal consolidation,” Dr Njoroge told Parliament recently.
According to the 2019 Medium Term Debt Management Strategy, debt maturing within a year has increased significantly, putting a strain on Kenya’s dwindling revenues.
In the period between January and December 2018, Sh54 for every Sh100 mobilised went to creditors as debt repayment.
Total government revenues stood at Sh1.4 trillion against a Sh2.58 trillion target despite the Treasury borrowing Sh311 billion from the domestic debt market. This has affected the government’s spending plan with allocations to crucial departments and ministries receiving a fraction of their approved monies.
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