Risks of running government on deficits

By XN Iraki
In the recent Budget Speech, the overall deficit is expected to be Sh279 billion. Simply put — we are spending more money than we are collecting. Finance Minister Njeru Githae says Government expects to close the financing gap through net foreign financing of 143.6 billion and 106.7 from domestic market.

On the face of it, there is nothing unusual about budget deficits; as individuals we have deficits and few Kenyans can boast of being debt-free.  It also makes economic sense to borrow — use other people’s money either because they have excess or have no clue what to do with it. There is nothing wrong with borrowing if the money is invested.