Kenya is expected to repay debts amounting to Sh1.4 trillion between January and December 2019, pointing to a looming cash crisis.
This means that for every Sh100 that hits the Government coffers through taxes, loans and grants, Sh95 will be forked out to creditors, leaving the Treasury with only Sh5 to run the Government – pay salaries, run hospitals and schools, build roads and dams and release funds to the counties.
Already, the burden of debt repayment is beginning to show, with the Treasury freezing development spending by State agencies and counties as it strives to honour all its debt obligations and remain in the good books of investors.
Some of the projects that have stalled are critical to the President’s ambitious plan to achieve food security and nutrition by 2022, such as irrigation, with the World Bank and Bretton Woods institution.
It emerged that a total six projects worth Sh1.7 billion had stalled under the National Irrigation Board (NIB).
The International Monetary Fund on the other hand warning that slashing of development budget would affect the economic growth of the country.
It is also revealed that the government has borrowed an additional Sh100 billion syndicated loan with two regional banks as it seeks to repay the Eurobond it took three years ago.
The two banks are Eastern and Southern African Trade and Development Bank (TDB) formerly PTA bank and Standard Chartered.