Ruto borrows more in the first six months than Uhuru
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Ruto borrows KSh17.4 billion more in the first six months than Uhuru despite his announcement to go slow on debt
Ruto borrows KSh17.4 billion more in the first six months than Uhuru despite his announcement to go slow on debt.
In its first six months in office, President William Ruto’s administration borrowed Sh17.4 billion more than his predecessor did, upending the plan to go slow on debt.
According to Treasury data, the new administration borrowed Sh452 billion in loans in the six months leading up to March, which is higher than the Sh434.6 billion its predecessor borrowed during the same time period the previous year.
Analysts had anticipated that the Ruto administration, after pledging to increase tax collections, would reduce new borrowing by a wider proportion.
However, the increase in expenditure under the Bottom-Up economic plan, which aims to direct funds to industries that can significantly contribute to the creation of wealth and jobs, has prevented further reductions in the nation’s indebtedness.
Ruto faces a narrow fiscal space to roll out his policies after his predecessor, Uhuru Kenyatta, increased public borrowing to fund infrastructure projects.
Kenya’s debt increased more than four-fold to Sh8.66 trillion under Ruto’s predecessor, who invested heavily in new rail links and other infrastructure.
The surge in liabilities left the country at high risk of debt distress, according to the International Monetary Fund.
Kenya has insisted it cannot default on its debt repayment obligations.
The increase in debt uptake came in a review period that saw the State cut both recurrent and development spending.
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Recurrent spending dropped by Sh4 billion to Sh542.6 billion when the Ruto and Kenyatta presidencies are compared while development expenditure fell by Sh32.7 billion to Sh106.7 billion.
But the six months have seen the Ruto administration commit more cash to loan repayments, underlining the burden of the ballooning public debt.
Kenya paid Sh578.4 billion to service debt in the first six to March compared to Sh501 billion in a similar period a year earlier during the Kenyatta era.
Ruto earlier said the government should never borrow to finance recurrent expenditure, adding the market could not sustain that kind of borrowing.
Recurrent expenditure normally includes civil servant salaries, domestic and foreign travel, and fuel costs for the government’s fleet of vehicles.
In the six months, Ruto’s team raised Sh928.1 billion in taxes compared to his predecessor’s Sh866.3 billion.
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