Economy
Pain of Sh67bn shortfall amidst debt repayments
Friday March 31 2023
Treasury Principal Secretary, Chris Kiptoo responds to questions from members of the Senate County Public Investment and Special Funds committee at Parliament Buildings, Nairobi on March 30, 2023. PHOTO | LUCY WANJIRU | NMG
Kenya spent Sh150 billion to repay public debt in the month of March alone, underlying the growing pain to service the country’s stock of debt in the midst of a revenue shortfall, MPs heard on Thursday.
This was on the backdrop of revelation by the Treasury Principal Secretary Chris Kiptoo that the country had a revenue shortfall of Sh67 billion by Wednesday.
Dr Kiptoo told the Senate that the Treasury is struggling to raise funds for disbursement to ministries, departments and agencies (MDAs) as well as counties.
“This month of March alone, we have paid Sh150 billion in debt repayment. This is the highest component of our revenue,” Dr Kiptoo told Senators.
Dr Kiptoo told the Senate County Public Investments and Special Funds Committee that public debt repayment and statutory payments such as pension form the first charge on the Consolidated Fund.
“We have prioritised payment of public debt and pension. We have already settled all debt that was due and we are moving systematically to sort out the remaining payments and disbursements to national and county governments,” Dr Kiptoo said.
Read: Treasury plan to deal with Kenya’s debt crisis by 2026
“Payment of our public debt obligation is important for our international and national posture,” he said.
Kenya’s public debt has in the last 10 years been growing very fast as the government of former President Uhuru Kenyatta took up loans to build mega infrastructural projects such as the standard gauge railway, which gobbled up slightly over Sh600 billion.
The government has also incurred billions of shillings to construct roads, set up energy projects, and expand sea and airports, a situation that has pushed up the country’s debt level to Sh9.145 trillion.
Growth of debt, especially commercial loans such as the Eurobonds, has resulted in a spike in debt service costs, with billions of shillings in taxes going to interest payments at the expense of critical public services.
Appearing before the Senate committee, Dr Kiptoo revealed that the Treasury has delayed the release of Sh88 billion in development budget for the national government due to a shortfall in revenues.
“From July 1, 2022, to now, ministries and departments have not received a coin of their development budget which is usually about Sh200 billion annually,” he told the committee chaired by Vihiga Senator Godfrey Osotsi.
“We are lagging behind with MDAs and counties. We are working very hard to raise revenues through tax administration and tax compliance.”
Read: Forex reserves dip to 10-year low amid debt repayments
“We are also expecting an IMF program called Resilience and Sustainability Facility that will support climate change,” Dr Kiptoo told lawmakers.
