Treasury CS John Mbadi affirmed that Kenya will continue borrowing despite a staggering Sh11.2 trillion debt and a 65.7% debt-to-GDP ratio. Concerns about debt utilization and revenue collection were discussed amidst fiscal pressures resulting from recent social unrest. The government plans to focus on domestic borrowing going forward while aiming to improve resource management.
The Treasury Cabinet Secretary, John Mbadi, has publicly stated that Kenya will continue to borrow despite the nation facing an enormous debt of Sh11.2 trillion and a debt-to-GDP ratio of 65.7% as of June 2024, surpassing the acceptable threshold of 55%. In a recent Senate Finance and Budget Committee meeting, he emphasized the necessity of borrowing to maintain government operations.
Senator Mohamed Faki raised concerns regarding the utilization of the significant loans, questioning the government’s management of its debt amidst ongoing economic challenges. Mbadi acknowledged the current fiscal difficulties, which were exacerbated by the fallout from social unrest related to the controversial 2024 Finance Bill, resulting in a significant revenue shortfall.
The government plans to borrow Sh684.2 billion from domestic markets and Sh146.8 billion from external sources to address the forecasted budget deficit. This marks a strategic pivot towards domestic borrowing following a decrease in funding from the International Monetary Fund (IMF), which has resulted in revised lower external borrowing targets.
The Kenya Revenue Authority faces immense pressure to collect Sh1.07 trillion between March and June 2025, reflecting a need to significantly improve its current monthly revenue collection performance. Concerns have also been raised regarding a Sh42 billion loan acquired shortly after the recent general elections, leading to questions about the necessity of such borrowing during a transition period.
Further, Mbadi highlighted plans for a debt reduction strategy in collaboration with the Auditor-General’s office while urging ministries to reprioritize allocations to avoid any delays in the disbursement of government funds. He faced inquiries from Senator Boni Khalwale about Sh29.9 billion intended for devolved functions that have remained in the national treasury, to which he promised to provide a detailed response after reviewing the information.
In addressing lingering issues between governors and MPs regarding the Road Maintenance Levy Fund, he stressed the importance of seeking a political resolution to ensure effective service delivery at the county level. Finally, the CS expressed regret for missing previous committee meetings, asserting his commitment to collaboration and cooperation with the Senate in matters of fiscal policy.
In summary, despite Kenya’s rising debt, Treasury CS John Mbadi confirmed that borrowing will continue to fund government operations. Significant fiscal challenges remain, particularly regarding debt management and revenue collection. The government is pivoting to domestic borrowing amid declining external support from the IMF. Mbadi assured lawmakers of efforts to enhance resource allocation and address outstanding financial concerns. The commitment to finding resolutions in ongoing disputes affecting service delivery was also emphasized, highlighting the importance of governance cooperation in addressing these challenges.
Original Source: eastleighvoice.co.ke
