Borrowing spree continues as Kenya borrows over Sh430 billion in 5 months
Mid this year the World Bank raised concerns about Kenya’s heavy borrowing and its possible impact on the country’s future.
According to a report tabled in the national assembly, the government borrowed over Sh430 billion within a span of five months from February 1 and June 30 this year.
The report tabled by Leader of Majority Aden Duale on Wednesday shows the funds originates from the 29 loans signed between the government and bilateral, multilateral and commercial creditors.
Already some Sh156 billion worth of the loans from commercial creditors, PTA Bank and a consortium of lenders comprising the Standard Chartered Bank, Standard Bank, CITI Bank and Rand Merchant bank has been disbursed.
Disbursements of the remaining funds are expected over the medium-term, the document states.
The loans will be used to finance infrastructure projects, including roads, irrigation, water supply, energy, health and education across the country according to the National Treasury.
However, there has been increasing concern among Kenyans and economists alike that the country may be borrowing more than it can sustain and likely to cross the tipping point.
Debt in itself is not a bad idea, actually it is vital for growth and most countries depend on loans to grow their economies however there is always a danger of the funds being diverted for other activities apart from development like recurrent expenditures such as paying salaries.
As of March 2017, Kenya’s gross public debt stood at Sh4.04 trillion or 52.6 per cent of GDP according to the latest data from the treasury, above the EAC convergence criteria threshold of 50 per cent of GDP.
The World Economic Forum ranks Kenya at number 96 out of 138 countries using the GDP/debt ratio score.
The National Treasury has however dismissed claims of overborrowing.
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