The National Treasury is actively contemplating a fiscal consolidation strategy aimed at mitigating the growing deficit and managing the escalating public debt, which has now reached a staggering Ksh10.56 trillion. This figure marks a significant rise from Ksh10.28 trillion recorded in June 2023, accounting for approximately 72 percent of the country’s gross domestic product (GDP) at current prices.....CLICK HERE TO READ THE FULL ARTICLE>>>
In response to this alarming trend, the government has set forth a plan to reduce the fiscal deficit from 5.6 percent of GDP in the fiscal year 2023/24 to a more sustainable 3.0 percent over the medium term. This initiative is seen as crucial for stabilizing the nation’s financial health and ensuring that public debt does not spiral further out of control.
According to the Macro Economic Outlook for the Medium-Term Budget, achieving a lower fiscal deficit is expected to bolster the primary surplus, which in turn will help stabilize public debt levels over the coming years. The latest data from the Office of the Controller of Budget (CoB) reveals that as of June 30, 2024, Kenya’s public debt stood at Ksh10.56 trillion, representing 65 percent of GDP at current prices.
This situation has raised alarms among policymakers, as the government’s reliance on borrowing to finance its expenditures has outpaced its revenue generation capabilities, leading to a precarious financial situation that necessitates urgent corrective measures.
The revised estimates for the fiscal year 2023/24 indicate that total expenditure on public debt has reached Ksh1.59 trillion, which constitutes 89 percent of the adjusted annual budget estimates. This is a notable increase from the previous fiscal year, where the expenditure was Ksh1.15 trillion, or 83 percent of the revised estimates for FY 2022/23.
The breakdown of this debt expenditure includes Ksh834.85 billion allocated for principal repayments, Ksh750.41 billion for interest payments, Ksh1.58 billion in commitment fees, and Ksh361.71 million for various other charges.
The costs associated with external debt are influenced by a multitude of factors, including fluctuating interest rates, commitment fees, and penalties, all of which are further complicated by the volatility of exchange rates….CLICK HERE FOR MORE ARTICLE>>>
