Ruto borrows more than KSh137bn in three months
Ruto borrows more than KSh137bn in three months since assuming office despite his campaign pledge to tame public borrowing
Ruto borrows more than KSh137bn in three months since assuming office despite his campaign pledge to tame public borrowing.
In the three months after taking office, President William Ruto’s administration has borrowed more than Sh137 billion, with an average monthly borrowing of Sh45.8 billion.
During this time, the new government has increasingly turned to the domestic market to finance income deficits.
According to a report by the Central Bank of Kenya (CBK), the government borrowed a total of Sh137.48 billion in the first three months of Ruto’s presidency, in the months of September, October, and November.
The Kenya Kwanza administration’s new loans amount to an average daily borrowing rate over the course of 91 days of Sh1.51 billion, with November being the highest borrowing rate.
The government borrowed a total of Sh82.27 billion between the beginning of the 2022–23 fiscal year in July 2022 and the end of August, which increased to Sh219.75 billion by the end of November.
The government borrowed Sh50.42 billion more in September, bringing its total debt since July to Sh132.69 billion.
Only Sh50 million of the total borrowed throughout the month came from local lenders; the rest came from overseas lenders.
The government borrowed Sh21.85 billion in fresh debt in October, with about Sh9 billion coming from the domestic market and Sh13 billion coming from international deficit finance.
The highest borrowing by the government was recorded in November when a total of Sh65.21 billion in new debt was procured, mainly from the domestic market.
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In November, the CBK report shows, the government borrowed Sh70.5 billion from the domestic market, while debt accumulated from foreign financiers reduced by Sh5.29 billion.
Average daily borrowings by the government through November were Sh2.17 billion, the highest over the three months.
Over the three months, the government borrowed more from the domestic market, than the foreign market.
Borrowing from the domestic market was Sh79.2 billion (57.6 percent of the newly accumulated debt), while newly accumulated debts from foreign financiers constituted Sh58.28 billion (42.4 percent).
“Deficit financing comprises external borrowing, domestic borrowing, and sales of government shares in government agencies (privatization),” the report says.
The government did not privatize any of its agencies during the period, with the privatization Bill having just been released this past week for public participation.
The report shows that Kenya’s public debt hit Sh8.89 trillion by November 2022 from Sh8.117 trillion in November 2021, a KSh781 billion increase.
Since assuming office, President Ruto has spoken openly against growing the public debt, indicating his objective was to grow government revenues and cut non-essential spending as a way to reduce budget deficits and slow down on borrowing.
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The President has also been critical of President Kenyatta’s borrowing record, terming it unsustainable.
“We must stabilize our public finances. This year, we will spend 60 percent of our revenues to service our debt. We are faced with Sh600 billion in pending bills for goods and services supplied to the government. Clearly, we are living beyond our means. This situation must be corrected,” the President said after his inauguration in September.
He later ordered a KSh300 billion cut on government expenditures in the 2022/23 budget, while he gave Kenya Revenue Authority targets to raise Sh3 trillion in revenues during the next financial year, up from the Sh2 trillion the authority collected in 2021/22.
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