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Economic experts caution Kenya over rising public debt

Xinhua, June 17, 2016 Adjust font size:

Economic experts on Friday cautioned Kenya over its rising public debt levels.

Institute of Certified Public Accountants of Kenya (ICPAK) National Chairman Fernandes Barasa told a budget forum in Nairobi that as at September 2015, the public debt stock stood at 29.4 billion U.S. dollars.

"This means that Kenya's public debt is rapidly increasing given that it was 17.2 billion dollars in September 2012," Barasa said during the National Budget Review Seminar.

Kenya's public debt comprises of 15.5 billion dollars as foreign debts and 13.9 billion dollars as domestic debts.

Barasa said that the National Treasury should adhere to fiscal responsibility principles in the management of public resources.

"This can be achieved by ensuring that over the medium term, the national government's borrowings shall be used only for the purpose of financing development expenditure and not for recurrent expenditure," he said.

In addition, the institute recommends that all public debt and obligations should be maintained at a sustainable level as approved by the parliament.

Barasa noted that Kenya should implement the World Bank and the International Monetary Fund's (IMF) proposed guidelines in order to strengthen the quality of the country's public debt management which will help to reduce vulnerability to domestic and external shocks.

Last week, Kenya's National treasury proposed a 23 billion dollar budget for the 2016/2017 up from the previous year's 20 billion dollars budget.

The accountancy body said that growth in the national budget requires a focused assessment for realism and the ability of the country to raise the commensurate revenue to fund the budget.

The 2016 budget statement also outlined the government intention to raise revenues of 15 billion dollars which is equivalent to 20.3 percent of the country's Gross Domestic Product (GDP).

"This projection was underpinned by policy interventions to broaden the tax base as well as enhance of the revenue administration," Barasa said. Endit