Kenya's economic survey report has painted a grim picture with caution that debt sustainability remains a concern given its increasing levels.
The 2016 report tabled in the National Assembly placed total public debt at Sh2.8 trillion by the end of December 2015, about 49.7 per cent of the country's gross domestic product.
A debt of Sh2.3 trillion was recorded at the end of December 2014.
“Debt will be sustainable if government revenue and expenditure move in a similar manner, which would imply that the government will be able to finance its expenditure from its revenues,” says the report by the Devolution Ministry.
The survey found that
the total external debt stock, including the famous International Sovereign Bond, stood at Sh1.6 trillion as at December 2015 and accounted for 51 per cent of total gross public debt.
The sovereign bond/Eurobond issue has been on the minds of Kenyans, with claims by Cord leaders Raila Odinga, Kalonzo Musyoka and Moses Wetang'ula that a huge chunk of the Sh250 billion raised was misappropriated.
The government is yet to come up with a clear explanation.
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The National Assembly Public Accounts Committee is investigating the matter through a team of auditors appointed by auditor general Edward Ouko.
The team will
travel to the US to interrogate the banks that were involved in the transactions, is yet to travel five months down the line.
Of the total debt, multilateral debt makes up 47 per cent, bilateral 30 per cent, export credit debt one percent and commercial bank debt at 23 per cent.
Most of Kenya's debt remains on concessional terms though its commercial component has increased.
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The increase in public debt at the national level has been occasioned by a faster expenditure growth rate, compared to government revenue.
“The growth in expenditure has over time mirrored the growth in revenue, except for increased expenditure during election years. After 2012, total expenditure increased at a higher rate as total revenue grew at a declining rate,” the report says.
To bridge the gap, the survey recommends broadening the tax base through reforms on taxation laws - VAT and Excise, taxation of SMEs and the real estate sector, capital gains and enhancement of tax administration to ensure compliance is fast-tracked.
At county level, under-performance of local revenue systems, weak internal controls and weak public financial management systems remain the biggest challenges.
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