Kenyan Treasury CS John Mbadi announced that the government will not stop borrowing despite a current debt of Sh11.2 trillion and a debt-to-GDP ratio exceeding the sustainability threshold. He defended continued borrowing to sustain governmental operations and reported plans for further domestic borrowing while addressing public concerns over fund utilization and transparency. The government faces pressures in tax collection and will work with the Auditor-General to develop a debt reduction strategy.
Despite the alarming figure of Sh11.2 trillion in national debt, Treasury Cabinet Secretary John Mbadi stated that Kenya will not cease borrowing. This assertion was made during a session with the Senate Finance and Budget Committee, where Mbadi emphasized that borrowing is essential for sustaining the government’s operations, particularly in light of the current 65.7 percent debt-to-GDP ratio, significantly exceeding the 55 percent sustainability threshold.
Mombasa Senator Mohamed Faki challenged the government’s borrowing practices, questioning the effective utilization of the loans. He pointed out the public’s growing concern regarding why the country continues to accrue massive debt while lacking transparency on expenditure. In recognition of these concerns, Mbadi acknowledged that public trust remains low, yet he assured that efforts are being made to ensure the responsible use of borrowed funds, reinforcing that these debts necessitate repayment.
In terms of fiscal strategy, the government anticipates borrowing Sh684.2 billion domestically and Sh146.8 billion externally to address the budget deficit for the fiscal year ending June 2026. This approach has shifted towards domestic borrowing due to diminishing resources from international lenders, including the IMF. The Kenya Revenue Authority faces the significant challenge of raising Sh1.07 trillion within a limited timeframe, underscoring the urgent need for efficient tax collection.
Mbadi also expressed concern regarding a Sh42 billion loan acquired just after the last general election, questioning the necessity given the expected transition in administration. Additionally, he noted ongoing consultations with the Auditor-General’s office to formulate a debt reduction strategy and mentioned the need for ministries to redirect resources to priority areas to maximize the impact of government funds.
Senator Boni Khalwale further pressed for clarity on the Sh29.9 billion for devolved functions that remained with the national government. In his response, Mbadi indicated he would provide a more thorough explanation upon reviewing related reports. He also called for a political resolution to the ongoing dispute between governors and MPs concerning the Road Maintenance Levy Fund, stressing the importance of maintaining service delivery in counties. Finally, he extended his apologies for missing previous committee meetings, reaffirming his respect for the Senate’s legislative process.
In summary, Kenya’s Cabinet Secretary for Treasury, John Mbadi, has firmly stated that the government will continue to borrow despite the nation’s looming debt crisis. With a significant debt-to-GDP ratio and increased scrutiny from lawmakers, the government aims to ensure responsible utilization of borrowed funds while addressing the urgent need for financial stability and effective public resource management. Mbadi’s reaffirmation of sustained borrowing highlights the government’s commitment to ongoing fiscal operations amidst challenges in national finance and public trust.
Original Source: eastleighvoice.co.ke
