Kenya’s President, William Ruto has announced plans to borrow $30 billion (Sh3.6 trillion) in his first five-year term. His announcement throws his plan to go slow on debt into a ditch. The $30 billion is equivalent to 89 per cent of the record over $32 million (Sh4.1 trillion) his predecessor, Uhuru Kenyatta, borrowed during his five years to June 2022. The figure is also more than the over $21 billion (Sh2.7 trillion) Kenyatta borrowed in his first term. Ruto’s borrowing plan also exceeds the over $ 8 billion (Sh1 trillion) that the late Mwai Kibaki borrowed in his last five-year term.
Analysts’ prediction of the Ruto administration
Earlier, analysts were expectant that the Ruto administration would slow down on borrowing. Their prediction was based on its commitment to ramping up tax collections over the next five years. However, the administration’s “Bottom-up economic plan” has prevented deeper cuts on the country’s debt. Dr Ruto’s economic plan which proposes to channel resources to sectors that can massively impact wealth and job creation will have little or no effect on the borrowings.
Treasury data has revealed that Kenya will cut down on borrowings for the next three financial years. This cutdown includes the $5 million (Sh690 billion) meant for the year to June 2024. However, the borrowing will increase as Kenya prepares for the 2027 General Election. It was predicted that the nation’s debt will increase to over $6 billion dollars (Sh844 billion) in the year to June 2027, matching levels witnessed under the Uhuru Kenyatta administration. Reports say Ruto’s budget will top over $41 billion (Sh5.1 trillion) in the fiscal year ending June 2027. This is way higher than Kenyatta’s last annual expenditure of over $24 billion (Sh3.0 trillion).
Run down of Kenya’s debt
According to International Monetary Fund, IMF, Kenya currently spends over half of its tax revenue on servicing liabilities. This places the country at risk of debt distress. Like Ruto, Kenya’s debt increased more than four-fold to $71 billion (Sh8.58 trillion) under Kenyatta, who invested heavily in new rail links and other infrastructure.
With the latest development, Kenya’s debt profile seems to be on the increase, just like Nigeria whose debt is rapidly on the increase.
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