According to the National Treasury, there is no cause for alarm as far as Kenya’s public debt is concerned.

This was the message by the Director of Public Debt at the National Treasury, Mr. Daniel Ndolo when he addressed the 61st edition of the KARA Bi Monthly Talk Series forum held on 20th March 2018 in Nairobi. “At 54% of GDP, Kenya is still within acceptable levels of public debt and can still borrow up to 74% of GDP” he said. Mr. Ndolo explained that the country’s fiscal deficit is expected to close at 6.5 per cent of the Gross Domestic Product (GDP) for the 2017/2018 financial year, down from 8.5 per cent the previous year. He said that the government is keen to continue maintaining borrowing at levels that are consistent with sustainability parameters.

Despite the assurance, participants at the forum were not convinced that Kenya’s is on the right track regarding its debt. There were concerns that the Government is overburdening its citizens with unnecessary debts that cannot be properly accounted for. The Government was challenged to exploit local revenue sources as opposed to external borrowing which come with unfavorable conditions and are subject to external dynamics. Participants were concerned that previous debts such as the Eurobond were never properly accounted for yet the Government continues to borrow without informing the public what the money will be used for.

Other speakers at the forum were Dr. XN Iraki of University of Nairobi and Mr. Ndirangu Nhunjiri, a Financial Analyst. Dr. Iraki stated that there is nothing wrong with borrowing as a country cannot develop without doing so. He however said that there should be a clear plan of what the money is to be used for and the Government should be accountable to the public on management of the funds. Mr. Ngunjiri reiterated that Kenya’s is still within safe levels of debt compared to other countries and to the acceptable level of 74%.
Over the last few years, Kenya’s rising public debt has been a point of concern for the public and some experts. Globally the accepted debt level as per the IMF for frontier economies is 50% of GDP. The country’s public debt ratio could soar above the international thresholds if the borrowing continues. The Government was challenged to put in place proper policies to reduce the public debt levels and lessen the burden on Kenya’s economy. The National Treasury was also urged to communicate to the public more on its activities and plans