- President William Ruto’s administration has allocated a record Sh1.35 trillion towards the repayment of the public debt as the obligation continues to take a toll on government revenues.
- In the draft Division of Revenue Bill, 2024 tabled in the Senate, the National Treasury has proposed the highest allocation on debt repayment in the last five years.
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President William Ruto’s administration has allocated a record Sh1.35 trillion towards repayment of public debt.
The allocation takes up 47 per cent of the projected ordinary revenue in the 2024-25 financial year.
It is the highest allocation on debt repayment in the past five years and exposes the pain of debt payment.
The allocation is three and a half times more than the amount allocated to the 47 county governments, 32 times more than the amount allocated to Parliament and 56 times more than the allocation to Judiciary.
“The Bill has taken into account debt related costs. This comprises of the annual debt redemption costs as well as interest payment for domestic and external debts,” Treasury Cabinet Secretary Njunguna Ndung’u said.
Division of Revenue Bill divides revenue generated nationally between the national and county governments.
In the Bill, Treasury has allocated Sh2.54 trillion to the national government and Sh391.11 billion to the devolved units.
The Treasury projects to collect Sh2.94 trillion in ordinary revenue.
This is an increase compared to Sh2.56 trillion projected in the current financial year, Sh2.41 trillion projected in 2022-23 and Sh1.77 trillion projected in 2021-22 financial year.
In the current financial year, the state allocated Sh1.18 trillion towards debt repayments with some Sh930.35 billion in 2022-23 financial year.
Debt repayment took up Sh1.17 trillion in 2021-22 and Sh829.90 billion the year before.
“In financial year 2024-25, the allocation for payment of public debt related costs is expected to increase from Sh1.18 trillion in financial year 2023-24 to Sh1.35 trillion in financial year 2024-25,” the Bill states.
Kenya is in a serious debt distress. Currently, the country’s public debt has surpassed Sh11 trillion.
The move forced the government to revise the debt ceiling from a nominal figure to a percentage of the country’s Gross Domestic Product.
Last week, the Treasury issued a new Eurobond worth Sh238 billion to buy back the inaugural one due in June 2024.
“The proceeds of the 2023 Eurobonds will fund the offer to buy Kenya’s existing $2 billion Eurobonds (Sh238 billion) due in 2024, pending demand in the tender offer whose results are expected in February 15,” the exchequer said.
In the Bill, the Treasury has allocated Sh23.69 billion up from Sh22.28 billion in the current financial year to the Judiciary.
Parliament has been given Sh41.62 billion from the current Sh41.00 billion.
Constitutional commissions including Commission on Revenue Allocation, Salaries and Remuneration Commission, National Land Commission, National Police Service Commission, Independent Electoral and Boundaries Commission and Teachers Service Commission have been allocated Sh378.45 billion.
The state has allocated 23.96 billion towards enhancement of security operations – purchase of police vehicles, helicopters and defense among others.
National irrigation and fertiliser clearance and youth empowerment have been allocated Sh28.41 billion and Sh15.24 billion respectively.
County governments have been allocated Sh391.11 billion in equitable share and Sh19.06 billion in additional allocation.
“The proposed equitable share allocated to the county governments in the division of revenue bill, 2024 has taken into account the approved third basis formula for Revenue Allocation,” the Bill states.