The National Treasury used Sh. 63.5 out of every Sh. 100 that was collected by the Kenya Revenue Authority to pay debts in the last two months.
This translated to Sh. 177.95 billion that was used to pay debts out of the Sh. 280.23 billion that was collected over this period.
In the period under review, KRA collected Sh. 149.62 billion in August and Sh. 130.6 billion in July, a growth of 19.36 per cent and 7.19 per cent, respectively, over similar months last year.
In the upcoming months, it is expected that the country will continue to spend more on debt repayments than on infrastructure development.
“Whilst initially the fiscal deficit was prompted by large infrastructure-related expenditures, the increase in debt servicing expenditures alongside critical expenditures (such as implementation of the economic recovery strategy, national election-related expenditures), is expected to play a greater role in the stickiness of the fiscal deficit over the medium term, and determine the pace of debt stock growth,” Parliamentary Budget Office said in a strategy paper.
According to the National Treasury, as of June 2022, Kenya’s debt stood at Sh. 8.6 trillion. Public and publicly guaranteed external debt is at Sh. 4.1 trillion, with domestic debt standing at Sh. 3.9 trillion.
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Commercial loans account for about 30 per cent of external loans while bilateral loans take up 30 per cent.
Central Bank of Kenya Governor Patrick Njoroge has cautioned against borrowing, saying that the country could be at risk of default.
“Economic consequences of high debt are adverse and legislators have to not only ensure that we repay the debts, but also avoid accumulating more debts as a country,” he said.