James Momanyi @jamomanyi
National Treasury Cabinet secretary Henry Rotich yesterday calmed fears that the country’s public debt load, which has ballooned to Sh5 trillion, will soon become unsustainable.
According to official statistics, external debt load has accumulated to Sh2.56 trillion while the domestic debt has hit Sh2.44 trillion summing to Sh5.01 trillion by the end of February this year.
Responding to the protracted debate on the raging public debt after reading the budget statement yesterday, Rotich said the debt is currently sustainable because it is rising relative to the growth of the economy.
“Our debt will continue to increase even reaching Sh10 trillion in the next five years. That should not be a concern because people should look at the size of the debt relative with the size of our economy instead of looking at its nominal growth,” said Rotich.
The CS further said while the debt has risen from about Sh200 billion in 2002, in the last five years, it has grown exponentially because of the infrastructural projects like the Standard Gauge Railway (SGR) and not-for-consumption expenditure.
Principal Secretary Kamau Thugge said the worries are misplaced because while Kenya’s debt growth relative to the GDP is around 50 per cent, other countries have a higher ratio comparatively.
“Countries like US have a 100 per cent debt to GDP ratio, Japan is 200 per cent while Britain is 90 per cent. The average accumulation of debt to GDP in the sub-Saharan Africa is about 28 per cent but some countries have grown their ratio to even 100 per cent,” he said.
According to the budget statement, Rotich said a Sh2.55 trillion — expenditure recurring Sh1.5 trillion, development Sh625 billion and Sh326.4 billion — counties will be funded from the Sh1.92 trillion the Kenya Revenue Authority is expected to collect in financial year 2018/19 up from Sh1.6 trillion collected in the current financial year.
The deficit of Sh558.9 billion (equivalent to 5.7 per cent of GDP) will be financed by net external financing amounting to Sh287 billion (equivalent to 3.0 per cent of GDP) while other domestic financing will amount to Sh271.9 billion (equivalent to 2.8 per cent of GDP).