More loans by the state to increase debt load to 6.6tr

More loans by the state to increase debt load to 6.6tr
  • PublishedJune 23, 2020

Due to the current situation where tax revenue has been limited, every eye is looking at the state for support. This leaves the state with no other option but to ramp up debts in order to meet the needs of its citizens and save businesses. The treasury is expected to borrow sh774 billion in order to finance its budget amid the Covid-19 pandemic. This will see the debt load rise to 6.6 trillion. The treasury has been forced to take this step due to the shrinking revenues during this times. This is according to a recent analysis of Central Bank of Kenya (CBK) data

This time’s fiscal deficit of 774 billion records the biggest blow on the state’s budget since June 2017, when the state borrowed sh788 billion in order to facilitate the governments major development projects like Standard Gauge Railway. Considering the fact that the difference between our country’s tax revenues and our country’s spending amounts to sh774 billion, the government has to look for every possible ways to curb the deficit, which includes borrowing of loans and applying for aid.

The sh774 billion has seen the country’s debt distress being downgraded from low risk to high by the International Monetary Fund (IMF). Covid-19 is not the only factor responsible for the borrow, but also poor tax collection. The borrowing has also seen the country’s debt vulnerabilities rise.


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