Kenya is now feeling the pinch of servicing huge loans leaving almost nothing for development.
The current debt repayment stands at KSh1.1 trillion annually. The repayment is wiping out a huge chunk of revenue collected, leaving little for other budgetary allocations, experts have said.
The amount allocated to service debt annually is 68 per cent of the revenue raised, a figure that is too high to be sustainable.
Experts from Commission on Revenue Allocation (CRA), Controller of Budget (CoB) and the Institute of Certified Accountants of Kenya (ICPAK), yesterday told Senate Kenya’s revenue projections were too ambitious, considering the debt burden being shouldered.
They were addressing a Senate committee session on the Budget Policy Statement (BPS) 2019 on public debt management.
They argued that the figures displayed by the Government were a complete departure from reality, giving National Treasury a leeway to borrow and slash already budgeted funds for development to bridge deficits.
“We are in the red. Our quantum payment of debt has crossed over the Sh1 trillion mark. The debt is rising yearly. Revenue projection has been raised from Sh1.4 trillion to the current Sh1.6 trillion. It is expected to be raised to Sh1.8 trillion. The Sh600 billion balance remaining from revenue after debt repayment is not enough,” said Joshua Musimi, CoB Director for Research and Planning.
Senator Ali Farhiya (nominated) cautioned that the matter should be addressed at this point or the economy would crumble.
“It is clear there is no money for development. The figures are too high and in reality we have no money,” said Farhiya.
Bungoma Senator Moses Wetang’ula noted that a red flag had been raised over Kenya’s unsustainable debt and wondered why the ministry continued to mislead the public.