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Ruto increases foreign borrowing after revising the 2023/24 budget

Ruto administration increases foreign borrowing after revising the 2023/24 financial year budget from Ksh3.7 trillion to Ksh3.9 trillion. 

The government has increased the amount to be borrowed from the foreign market from Ksh131 billion to Ksh449 billion while reducing domestic borrowing to Ksh411 billion in the Budget Review and Outlook Paper (BROP) released by the Treasury on Sunday. 

Treasury anticipates that higher tax receipts and previously revised foreign borrowing will be used to fund the increased budget. 

President Ruto rode to power on the promise of cutting reckless spending and borrowing but has since ramped up foreign and domestic loans since taking office. 

Borrowing from the domestic market as promised by Central Bank Governor Kamau Thugge has dropped, though not at the initially projected Ksh316 billion. 

The government will use Ksh583 billion that was approved by parliament in June to borrow Ksh411 billion domestically.

By reducing the intake of debt from local banks, the government intends to lower interest rates and boost lending to the private sector. 

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Revised spending has been necessitated by adjustments in National Government spending.

In the budget, ministerial national government expenses had been allocated Ksh2.38 trillion but the amount has now been revised to Ksh2.4 trillion.

Additionally, the Treasury will spend Ksh1.3 trillion in interest and pensions up from the planned Ksh986 billion.

While the Treasury has increased the budget for National Government expenses, the equitable share sent to counties remains unchanged at Ksh385 billion.

Remarking on this, the Treasury accused County Governments of not looking for alternative ways to increase revenue as advised by the Constitution.

“County Governments may borrow in line with Article 212 (a) of the Constitution with guarantee from the National Government. However, since the advent of devolution, no County Government has leveraged this window to borrow,” County Governors were accused. 

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