- According to the National Treasury statement of actual revenues and net exchequer issues, the government will only manage Sh955.6billion going by the current trends.
- This is Sh213.5billion shy of the country's Sh1.17trillion debt obligation.
Image: COURTESY
Kenya has paid Sh238.9 billion of its debt in the past three months, out of its revised total debt obligation this financial year.
According to the National Treasury statement of Actual Revenues and Net Exchequer Issues as of September 30, the government will only manage Sh955.6billion going by the current trends.
This is Sh213.5 billion shy of the country's Sh1.17trillion debt obligation.
According to a recent report on the status of Kenya's debt, the country's debt will be Sh8.7 trillion by end of June next year.
The rising debt stock is what resulted in the high debt servicing expenditure amounting to Sh1.17 trillion up from the projected Sh952.7 billion.
This thin repayment of the public debt however comes on the backdrop of increased revenue collection.
According to the treasury report, tax collected through the first quarter of the 2021-2022 year rose to Sh416.8 billion from Sh317.7 billion in the same period stage last year.
Non-tax revenues raised in the same period have grown at a slower pace to stand at Sh25.4 billion in contrast to Sh24.9 billion last year.
On domestic borrowing to raise revenue, Treasury has so far borrowed Sh306.8billion out of a Sh1trillion estimate
The exchequer expects to collect Sh3.1 trillion in revenue by the end of the financial year.
The rising revenues however are overshadowed by repayment of debt.
For example, in July and August, Kenya raised Sh253.46 billion in revenues and spent Sh162.37 billion to pay the debt.
As for recurrent expenditure, the government has so far spent Sh256.4billion out of a Sh1.1trillion estimate.
On development expenditure, it has spent Sh81.8billion out of a Sh389.2billion estimate.
Counties have received Sh61.05 billion in the three months out of a Sh370 billion estimate for the year.
Going by the trend, counties might not receive their full budget, a move likely to escalate the annual tussle between the exchequer and counties on revenue allocation.
While the Kenya Revenue Authority has heightened revenue collection, counties and development budgets continue to suffer as most of the amount is redirected to debt payment.
According to a recent Infotrak report, a large majority of Kenyans are troubled by the state of the country's public debt, especially accumulation of the external one.
The report indicated that at least 81 per cent of Kenyans are fearful, anxious or angry over the level of foreign debt.
“Most Kenyans are concerned that future generations will be saddled with the debt and will have to repay it for a long time,” the report said.
It added that others feel the country will not be able to pay back and hence be embarrassed for years or worse, lose National resources, facilities and installations.
Kenya's debt has been under sharp focus in recent times, with international rating firms like Moody's S&P and recently Agusto & Co.
The Pan- African credit rating firm termed Kenya's debt situation as 'moderately high risk', affirming creditworthiness at B+.
In May, Moody's changed the outlook on the Government of Kenya's ratings to negative from stable affirming the country’s B2 issuer and senior unsecured ratings.
It attributed the negative score to the country’s rising financing risks posed by large gross borrowing requirements, which include amortization of external bilateral debt and the need to refinance a large stock of short-term domestic debt.
In July, Standard and Poor's (S&P) lowered the country’s sovereign credit outlook to ‘negative’ from ‘stable’, citing unstable economic growth due to coronavirus pandemic.
Last month, World Bank Group President David Malpass said that over half of the world’s poorest countries are debt distressed.
He noted low-income countries will be pushed further into financial stress when the Debt Service Suspension Initiative(DSSI) expires in December.
“Governments have large fiscal deficits often pushing the public debt to dangerously high levels that require especially careful investment decisions by both the public and private sectors,” he said.