Central Bank of Kenya Governor Patrick Njoroge has urged members of the National Assembly to play an active role and deter debt accumulation in the country.
Njoroge who spoke on Monday during the induction workshop of the 349 legislators warned of the adverse effects of high debt if the situation is left untamed
“As Kenyans, we all need to add our voices in addressing the issues affecting our economy and rally around the best solutions that we can offer to revive our economic state,” Njoroge said.
According to Treasury, as of June 2022, Kenya’s debt stood at Sh8.6 trillion. Public and publicly guaranteed external debt is at Sh4.1 trillion, with domestic debt standing at Sh3.9 trillion. Commercial loans account for about 30 percent of external loans while bilateral loans take up 30 percent.
The lawmakers in the 12th Parliament in June increased public debt to Sh10 trillion to help the new administration fund its expenditure. Whereas Kenya’s appetite for external borrowing has been unmatched, Njoroge asked the lawmakers to ensure that Kenya does not default on its debt payment.
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“Economic consequences of high debt are adverse and legislators have to not only ensure that we repay the debts, but also avoid accumulating more debts as a country,” he said.
The International Monetary Fund (IMF) has classified Kenya’s debt at high risk of default with debt service consuming 63 percent of tax collections.
Njoroge disclosed that the current account balance shows a deficit of about 5.5 per cent of the GDP, and as projected it’s likely to go higher in the coming months before it stabilizes as we hope it does.
“Inflation has become endemic in the world economy; it’s not only a Kenyan problem. The global market has significant variations in commodity prices that end up affecting our pricing,” he said.
Treasury is in the process of surveying the state of the economy and will present its findings before the House when the exercise concludes.
SOURCE: Capital business
