Of the 45 million Kenyans, each one of them is required to pay about Sh100, 000 so as to clear the country’s soaring public debt that stands at Sh4.58 trillion.
This is according to the latest data by Central Bank of Kenya which reveals that the country recorded highest levels of public debt in 2017.
Government’s internal debt as at November last year stood at Sh2.22 trillion while as at September within the same period, external debt stood at Sh2.31 trillion.
A breakdown of government’s borrowing as reported by the Star shows Kenya borrowed an average of Sh62.7 billion per month last year, compared to Sh54 billion in 2016 and Sh55 billion the previous year.
The public debt now stands at 4.58 trillion.
The bulk of this money has been channeled to infrastructural projects in the country. China’s Exim Bank has lent Kenya close to Sh1 trillion to fund its mega infrastructure projects like the Standard Gauge Railway which is in its second phase.
Economists argue that the problem is not borrowing the money, but the capacity of the projects to repay the loan once they are completed.
“The question is not how much loan we take, be it from China or not. We must however interrogate if those projects can repay the loan, while giving Kenyans value for money. The government should also be in place to address the sustainability aspect,” says Kwame Owino, the CEO of Institute of Economic Affairs.
Anzetse Were, a development economist cast aspersion on Kenya’s debt repayment plan citing it could be headed to unsustainability.
“If expenditure is growing in the context of muted revenue generation, that creates momentum for more debt than can be adequately serviced. Further, if debt is not used efficiently and linked to increases in productivity and GDP growth, it also saddles countries with burdensome repayments,” she wrote on her blog.
International Monetary Fund (IMF) last year cautioned Kenya again further borrowing. The World Bank issued a similar caution in 2016.
Treasury CS Henry Rotich two month ago said Kenya’s debt levels are alright because investments funded by the loans have the capacity to repay.
Rotich also explained that Kenya’s debt is below the Country Policy and Institutional Assessment (CPIA) index standards, which cap debt-to-GDP at 74 per cent.