President William Ruto’s administration is paying at least Sh50 billion every week to maturing public debts, National Treasury Cabinet Secretary Njuguna Ndung’u has told MPs.
The CS told the Senate on Tuesday that the payments have occasioned a biting cash crunch in the country that resulted in delayed salary payments for civil servants.
The National Treasury is also yet to remit nearly Sh97 billion owed to county governments for the months of January, February and March.
The situation is further worsened by the dwindling revenue collections, pushing the Kenya Kwanza government further to the brink.
Facing the Senate County Public Investment and Special Funds committee, Ndung’u said in March alone, the total public debt maturities hit Sh147 billion.
Explaining the effect of the maturities on the local economy, the CS said the national treasury had to settle local debts so as to spur the local economy as most of the debts that fell due were domestic.
He told the committee led by Vihiga Senator Godfrey Osotsi that the debt obligations for the month of March were largely driven by interest payments to domestic creditors.
“The lumped-up maturities without corresponding exchequer receipts have led to the financial constraints that have hit the government,” said Ndung’u.
He said the economy is facing what he termed a perfect storm, with missed growth targets worsening revenue shortfalls and the prevailing tough times.
The Treasury boss further explained that public investments, which are the key drivers of growth, have slowed down.
Data from the Treasury shows that the debt-servicing budget is Sh1.36 trillion, down from the Sh1.39 trillion budget that had been set aside for servicing debts by former President Uhuru Kenyatta’s administration.
In January, the government spent Sh123.53 on debt obligations while in February it forked out Sh66.7 billion.
Ndung'u warned that while the debt-servicing obligations are falling due at the same time, revenue collection cannot match the obligations.
The situation is compounded by other obligations, including recurrent expenditure, with the monthly wage bill averaging Sh43.9 billion.
