Since 2017 Kenya’s ability to service its existing debts has been declining.
With this in mind, the government has been asked to tame its appetite for borrowing or it risks defaulting its debt obligations in 10 years time.
With the current existing loans, it was shocking after President Uhuru Kenyatta and ODM leader left the country to secure a fresh loan from china of Sh 368 billion for the expansion of the SGR to Kisumu.
A research done by some economists in the country showed that, Kenya risks defaulting its loan in 10 years if the current trend of borrowing continues. Research has shown that, the government has been using two thirds of its revenue to service its expenditure since 2013. Moreover, it was discovered that, money used to finance the government debt has been on a rising trend year after year.
In 2018 the government used Sh 870 billion of the budget to pay its existing debts as compared to Sh 650 billion used in 2017 and Sh 420 billion used in 2016. In 2013 the amount used to service debts was Sh 330 billion showing a clear uptrend. In turn, this has made it difficult for the country to finance other short term obligation and also to improve on service delivery to the common mwananchi.
Kenya has been taking loans from China, a country which has harsh loan terms and lacks background research of the loans it isses. The reason for avoiding western countries for loans is because of the strict measures that these countries take before they can issue loans. Shockingly, Chinesse loans have higher interests and shorter repayment periods as compared to those offered by IMF or World Bank.
Having said this,it is important that the loans are used in a manner that in the longer run they can finance themselves. Kenya should also fight corruption to ensure that no coin is lost to ease the burden of paying back the loans.