Speaking to the Star on phone, several money market experts and economists termed Ruto's remarks as ''reckless", saying such declarations have the potential to plunge the country into an economic crisis.
The president, during a meeting with the Association of Pension Trustees and Administrators of Kenya stakeholders on Friday, said he had instructed the National Treasury not to borrow exceeding a 10 per cent interest rate.
Ruto said it was no longer sustainable for the government to keep accumulating expensive debts that will be unmanageable in the future.
"It is not possible for us to borrow beyond 10 per cent. The last borrowing we did was at 14 per cent. That is unacceptable and that is the trajectory we are going," Ruto said, adding that his government will not make a U-turn on the decision.
On Tuesday, Financial analyst Ken Mulwa said the Ruto's order will impend subscription to some of government's debt products as investors seek better returns from emerging unit trusts and private bonds.
"This will have a negative impact on the country's fiscal plan which is broadly funded by debt amid low tax collections. It is wrong for the President to dictate yields,'' Mulwa said.
His position is supported by Joel Oeri, a money markets consultant who projects less than 40 per cent subscription rate on both Treasury bills and bonds.
"The country's inflation in October was 9.6 per cent. This is less than 40 basis points recommended yield rate. Some unit funds are already giving that figure in addition to a host of other incentives,'' Oeri said.
For instance, Safaricom has already received approvals from the Capital Markets Authority (CMA) to sell its unit trust, Mali.
The product which has been under consideration since 2019 will offer an annual interest of 10 per cent accrued daily.
Mali will allow for instant withdrawals, of either partial or all funds, credited to the M-Pesa wallet.
In case a customer wishes to withdraw beyond M-Pesa limits, the payment will roll over days until the full investment pays off.
Deposits and withdrawals from the investment tool are free.
Ruto's remarks come even as investors shy away from government papers despite the rising yield curve.
October's 25-year bond attracted bids of Sh14.9 billion against a target of Sh20 billion to represent a 74.47 per cent performance rate.
According to the auction report, the exchequer accepted Sh13.7 billion, taking total nettings from bonds on offer to Sh28.8 billion after the mobilisation of Sh15.1 billion from two previously reopened bonds.
The amount raised is 48 per cent of the target of raising Sh60 billion from Treasury bonds in October.
The weighted average rate of accepted bids for the bond settled at 14.188 per cent, the highest rate issued on the bond in the past decade.
The recently re-opened 10 and 15-year papers whose auction closed on October 4 had a performance rate of just 47 per cent, mirroring a trend of investor snubs over recent months.
This has seen the government fall behind its domestic borrowing schedule.
The government intends to borrow Sh1.040 trillion in the current fiscal year to June 2023 but is behind the targeted rate run having mobilised only Sh95.7 billion in three months through to the end of September.
It is targeting to borrow Sh578.6 billion from the domestic market and the balance from the external debt market.
Last week, economist Mohammed Wehliye criticised Ruto's remarks saying that it is impossible for money markets and the government itself to survive under the strict directive.
Yesterday, a National Treasury official who spoke on anonymity due to sensitivity of his office described Ruto's order as day dreaming.
"It is practically impossible. We are already witnessing undersubscription despite a favourable yield curve,'' the manager said.
