INSTITUTE OF ECONOMIC AFFAIRS – IEA raises alarm on Kenya’s public debt

Economists at the Institute of Economic Affairs (IEA) have urged President Uhuru Kenyatta to make a renegotiation on Kenya’s loan terms with Beijing as he begins his tour of China.

According to IEA, this will easen the current repayment pressure Kenya is facing on its debt obligation.

By September 2018, Kenya had borrowed Ksh.634 billion from China to finance mostly infrastructure and energy sectors despite the Chinese loans being considered expensive.

President Uhuru Kenyatta will on Thursday begin his visit to Beijing to finalize on another Ksh.386 Billion loan.

“The President needs to negotiate for better repayment terms , if this is not done then in the next 7-10 years we might default on our loan…,” said John Mutua-IEA.

The country’s debt currently stands at Ksh.5.15 trillion and with revenue generation having hit a plateau, IEA recommends expansion of tax base.

“The government needs to expand its tax net to also include the informal sector which will contribute largely to the country’s revenue,” said Mutua.

Kenya has surpassed other sub-Saharan African countries in their debt to GDP ratio with the average being 45.1% compared to Kenya’s 56.2%.

This though still sustainable may get out of hand in another decade.

The IEA made the presentation during a forum co-hosted by the Kenya Editors Guild with the President of the Guild Churchill Otieno, urging journalists to be proactive in discussing the country’s public debt.

Published on Citizen Digital on April 25th 2019: