Why Kenya Is Trapped In A Debt Spiral

Treasury bureaucrats have considered a raft of options to try and stabilize the country’s debt position. FILE PHOTO | NMG

By Otiato Guguyu

From effecting jobs cuts to tame a worryingly ballooning wage bill to repaying existing loans, Treasury bureaucrats have considered a raft of options to try and stabilize the country’s debt position.

Over the past five years, the public wage bill has jumped 61 percent to Sh604.33 billion as at 2018 compared with Sh374.94 billion in 2013, according to the Economic Survey 2019.

On the other hand, servicing Kenya’s debt has grown from Sh113 billion to Sh460 billion, a 307 per cent jump or fourfold increase.

These two discretionary spendings (meaning they have to be met before anything else is done in the country) are taking up all the revenues raised by the Kenya Revenue Authority (KRA) since the growth of debt is multiple times higher than an increase in revenues.

The taxman’s total ordinary revenue collection in 2018 stood at Sh1.83 trillion, up from Sh974.42 billion in the 2013/14 fiscal year –underlining the mismatch between collection and the pilling pressure from wage bill and debt servicing…Read more>>

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