Kenya’s Treasury Chief John Mbadi asserts that the country will persist in borrowing despite a national debt of Sh11.2 trillion, highlighting the necessity for ongoing financial support for government operations. The government aims to secure Sh684.2 billion domestically and Sh146.8 billion externally by June 2026, while the Kenya Revenue Authority is under pressure to enhance tax collection amidst rising debt concerns.
In June 2024, Kenya’s debt reached Sh11.2 trillion, causing concern due to a debt-to-GDP ratio of 65.7%, surpassing the 55% sustainability threshold. Nevertheless, National Treasury Cabinet Secretary John Mbadi has affirmed that the government will continue to borrow, as it is essential for maintaining government functions, as stated during a Senate Finance and Budget Committee meeting.
Senator Mohamed Faki expressed the public’s concerns regarding the increased debt and questioned the effectiveness of loan utilization in alleviating the nation’s financial burden. In light of the crippling fiscal situation exacerbated by public protests against the 2024 Finance Bill, MBadi confirmed that efforts are in place to optimize the use of borrowed funds.
For the financial year ending June 2026, the government aims to raise Sh684.2 billion domestically and Sh146.8 billion externally to address budget deficits. This decision stems from diminishing external funding, particularly from the International Monetary Fund (IMF), as borrowing targets have been lowered. The Kenya Revenue Authority (KRA) faces a greater challenge in meeting its collection target amid these changes.
Mbadi raised alarms about a Sh42 billion loan issued shortly after the last general elections, questioning its urgency. He also revealed that Sh1.3 trillion allocated for various sectors remains undisbursed. In response to Senator Boni Khalwale’s concerns regarding funds retained by the national government, Mbadi stated he would provide a response upon reviewing relevant reports.
Additionally, Mbadi called for a political resolution to conflicts between governors and MPs regarding the allocation of the Road Maintenance Levy Fund, emphasizing the importance of smooth service delivery in the counties. He acknowledged his prior absences from committee meetings, attributing them to engagements with IMF officials and assured lawmakers of his respect for the Senate’s vital role in budget matters.
In summary, despite a significant debt crisis, the Kenyan government, under Treasury CS John Mbadi, plans to continue borrowing to support its operations. Key challenges include rising debt levels, concerns over the effective use of funds, and increased fiscal pressure on the Kenya Revenue Authority. The government is actively working on strategies to enhance resource allocation and ensure better management of public finances while navigating these complex fiscal challenges.
Original Source: eastleighvoice.co.ke
