Domestic borrowing: President Uhuru Kenyatta’s government is expecting to borrow up to Sh. 1.27 trillion locally over the next four years.
The new move is expected to give local banks a golden opportunity to deepen their lending to the government. However, with banks having the opportunity to lend to government, ordinary individual borrowers will be pushed out of the credit market.
“Nearly Sh1.27 trillion will be tapped from domestic investors with foreign markets funding the remainder Sh863 billion of the debt portion. The funds will go into implementing Mr Kenyatta’s Big Four plans, the Treasury projections show,” says the Business Daily.
Currently, local banks control up to 55.5 per cent of the nearly Sh. 2.50 trillion domestic debt.
“Domestic borrowing through weekly sale of Treasury bills and bonds is projected at Sh. 299.9 billion in the year ending June 2019 from Sh. 366.5 billion in the year ended last June. This will, however, rise to Sh. 309.6 billion in the year to June 2020, Sh. 310.90 billion in June 2021 and Sh. 345.7 billion in June 2022,” the daily further reports.
Uhuru’s tenure at the presidency has been characterized by a huge appetite for loans. By the time he leaves office, projections show that President Uhuru will leave Kenyans with a Sh. 7 trillion debt burden as opposed to the about Sh. 1.8 trillion debt that he inherited from President Kibaki in 2013.
Of concern to many Kenyans, though, is that the huge loans the government has been taking are not reflected in the country’s development. Some are taken to offload due loans or settle recurrent expenditures.
External debt is forecast to fall to Sh. 272 billion this financial year ending June 2019 from Sh. 265.5 billion in the one ended June and Sh. 498.5 billion the year before.
New borrowing from foreign investors is set to further drop to Sh. 217 billion in the year to June 2020 and Sh. 147.2 billion the following year, according to the Treasury.
“Fiscal policy over the medium-term aims at supporting rapid and inclusive economic growth, ensuring a sustainable debt position by narrowing the budget deficit and at the same time supporting the devolved system of Government for effective delivery of services,” Treasury PS Kamau Thugge.