Kenya plans to borrow more money this year, according to a report by Cytonn Investments.
This decision has raised concerns about the country’s increasing public debt.
Just a month ago, the International Monetary Fund (IMF) advised Kenya to adopt stricter fiscal measures to manage its debt better.
As of December 11, 2024, Kenya’s public debt was about KES 11 trillion, with domestic debt at KES 5.8 trillion and external debt at KES 5.2 trillion.
This growing debt is causing worry because a large part of the government’s revenue is now used to repay loans, leaving less money for essential services like health and education.
In response to these challenges, the IMF has recommended that Kenya implement stricter fiscal measures.
These measures include improving tax collection, reducing unnecessary spending, and focusing on projects that offer high economic returns.
The goal is to ensure that borrowed funds are used effectively and that the country’s debt remains manageable.
However, the government’s recent proposal to increase taxes faced significant public opposition.
Widespread protests led to the withdrawal of the Finance Bill 2024/25, which aimed to address the rising debt through tax hikes.
This situation highlights the delicate balance the government must maintain between implementing necessary fiscal reforms and addressing public concerns.
To address the debt issue, experts suggest several steps.
These include better debt management, investing in sectors like tourism and manufacturing, and improving the business environment to attract more investments.
Additionally, reducing corruption and wasteful spending is crucial to ensure that public funds are used efficiently.
While borrowing can help fund important projects, it’s essential for Kenya to manage its debt carefully.
Implementing stricter fiscal measures, as advised by the IMF, and ensuring transparency in how funds are used will be key to maintaining economic stability and public trust.
Add Comment