This article reports on Treasury Cabinet Secretary John Mbadi’s remarks regarding Kenya’s ongoing borrowing amidst a debt crisis of Sh11.2 trillion. Despite a debt-to-GDP ratio exceeding the sustainable threshold, the government maintains that additional borrowing is essential for governmental functions. The article also highlights revenue collection challenges and pending allocation issues raised by Senators during a recent committee hearing.
In light of Kenya’s escalating fiscal situation, Treasury Cabinet Secretary John Mbadi has asserted that the government will continue to borrow despite the national debt reaching Sh11.2 trillion. As of June 2024, the debt-to-GDP ratio registered at 65.7%, significantly higher than the 55% sustainability threshold, highlighting the challenges faced by the economy.
During a Senate committee meeting, Mbadi justified the continued borrowing, stating that it is essential to maintain government functions. He emphasized this necessity against the backdrop of a severe fiscal crunch exacerbated by recent protests against the controversial 2024 Finance Bill, leading to a substantial revenue shortfall of Sh346 billion.
Senator Mohamed Faki questioned the efficacy of borrowing, expressing public concerns regarding the rising debt levels and the implementation of funds. In response, Mbadi acknowledged the lack of trust among the populace in the current administration but assured that measures are being taken to improve the utilization of borrowed funds.
The government anticipates borrowing Sh684.2 billion from the domestic market and Sh146.8 billion externally, primarily due to reduced financing from the International Monetary Fund (IMF). This domestic focus derives from external borrowing targets being lowered to Sh168 billion for the upcoming fiscal year. Meanwhile, the Kenya Revenue Authority aims to collect Sh1.07 trillion in revenue, significantly above its current performance.
Mbadi raised concerns over a Sh42 billion loan obtained shortly after the recent general elections, indicating potential issues with timing. He revealed that there is Sh1.3 trillion allocated for government functions yet to be disbursed, highlighting areas needing better resource management.
Furthermore, Kakamega Senator Boni Khalwale called out the Ministry for withholding Sh29.9 billion meant for devolved functions. While Mbadi promised to review the issue, he advocated for a political resolution on the Road Maintenance Levy Fund dispute to ensure county operations are not hindered. In closing, he expressed regret for not attending previous committee sessions and reiterated respect for the Senate’s role in budget oversight.
In conclusion, despite Kenya’s significant debt levels, the government, led by Treasury CS John Mbadi, remains committed to ongoing borrowing to sustain operations. Key challenges include high debt-to-GDP ratios and the urgent need for improved fiscal management. As the administration seeks to navigate these obstacles, it emphasizes prudent utilization of borrowed resources and collaboration with regulatory bodies, while also responding to critical concerns from legislators about transparency and effective fund management.
Original Source: eastleighvoice.co.ke
