- The expenditures show how the heavy public debt is taking a heavy toll on the government’s mega development projects.
- This comes at a time President Uhuru Kenyatta is rushing against time to complete legacy projects initiated by his administration
Image: EZEKIEL AMING'A
The government’s expenditure on repayment of debt was three times more than the amount spent on development in the last seven months, a report shows.
The expenditure on servicing debt was also thrice the amount sent to counties and half of the total revenue collected by Kenya Revenue Authority between June 1, 2021 and January 28, 2022.
In what underscores the country’s heavy debt, the expenditure accounts for 35.6 percent of the government’s expenditure, only second to recurrent for the national government.
This comes at a time when President Uhuru Kenyatta is rushing against time to complete legacy projects initiated by his administration.
According to a report on the summary of exchequer issues on January 28, exclusively obtained by the Star, the National Treasury has spent Sh570.15 billion towards debt repayment since the beginning of the financial year.
Debt repayment was allocated Sh1.16 trillion in the current financial year, implying that the Treasury has already paid up to 48.8 percent of the budget.
Over the period, the taxman collected Sh1.07 trillion in ordinary revenue against an annual target of Sh1.70 trillion.
The Treasury had disbursed Sh163.29 billion for development, translating to 10.2 percent of the total budget.
The low expenditures on development is suffocating the government’s projects, including Uhuru’s legacy projects.
Development was allocated a total of Sh389.22 billion in the 2021-22 budget.
Recurrent expenditure stood at Sh614.86 billion or 38.4 percent – the highest expenditure – as at January 28.
Some Sh171.83 billion out of annual allocation of Sh370 billion has been sent to the 47 county governments over the period.
The expenditures reveal the worrying status of public debt where the State is compelled to dig deeper into its pocket to meet its debt obligations.
Kenya’s total debt stood at Sh7.99 trillion as of September last year, according to a report by Controller of Budget Margaret Nyakang’o.
Public and publicly guaranteed external debt is at Sh4.1 trillion with domestic debt standing at Sh3.9 trillion as at the end of the first quarter of the financial year.
A a report by the Senate’s Budget and Finance committee released last year showed that the county’s debt stand at Sh8.7 trillion at the end of June.
“This will bring it to Sh337 billion short of Sh9 trillion debt ceiling and will result in the shortage of borrowing space to finance medium-term expenditure,” the report by the panel chaired by Kirinyaga senator Charles Kibiru stated.
Several players including CBK governor Patrick Njoroge, CoB boss Nyakang’o and Commission on Revenue Allocation chairperson Jane Kiringai have warned of a crisis and called for immediate action before it crushes the economy.
Nyakang’o, in her quarterly reports, stated that the government now borrows to fund recurrent expenditures.
“The continued reliance on external borrowing has negatively impacted the government’s commitment to reduce expenditures and maintain the overall borrowing within sustainable levels in line with Article 201 of the constitution,” Nyakang’o said in her 2020-21 budget implementation review report.
“Further, external borrowing depletes the country’s foreign exchange reserves, at a time when Kenya shillings has been unfavourably impacted,” she added.
Kiringai, however, turned the heat on Parliament for always approving budget deficits, forcing the Treasury to borrow more.
China is the biggest lender to Kenya, accounting for 67 per cent of the total external debt mainly infrastructure financing.