When President Uhuru Kenyatta leaves office in 2022, Kenya’s debt could be at a staggering Ksh9.2 trillion.
This is according to the latest Parliamentary Budget Office Report (PBO).
It indicates that in the next 10 months, the national debt currently at Ksh6.6 trillion will increase by another ksh750 billion which translates to Ksh2.6 billion.
National debt of Ksh9.2 trillion is three times the country’s annual budget.
“As at June 2020, the national debt stock had reached Sh6.6 trillion (Sh873 billion or 15% increase) and is projected to reach Sh7.5 trillion by June 2021,” states the report released this month according to Nation.
PBO added that the adverse effects of COVID-19 pandemic on domestic revenue are part of the reason why Kenya’s debt will soar in the next two years.
In the recent financial years, there was an additional collection of domestic revenue due to increased infrastructural project, energy production and social expenditures.
With the COVID-19 pandemic that disrupted the economy greatly, a financial bailout for Kenya is still insufficient.
“The magnitude of the economic stimulus to be undertaken in order to bring back the economy is likely to require significant financing beyond what has already been provided for in the budget,” the report adds.
Experts have now sounded an alarm over the rising external debt saying that it is likely to sink into debt stress.
“Prevailing depreciation of the Kenya shilling exchange rate presents a new but potent risk to external debt service and requires closer monitoring,” it says.
Half of the country’s revenue for the 2020/2021 financial year will now go into loan repayment which could strain the implementation of the set budget.
This is even as the reports adds that the government has been “wasteful” with Ksh7.6 billion spent on unnecessary commitments.
“Despite the planning of government financing for each financial year, the country continues to incur commitment fees arising from non-disbursement of external debt. Since financial year 2015/16, a total of Sh7.6 billion has been incurred as commitment fees,” the report states.