Government Ahead of Its Domestic Borrowing; Are We Thriving on the Wheels of Debts?

By Juma Fred / April 17, 2017

Debts

The Government of Kenya is ahead of its domestic borrowing for the current fiscal year having borrowed 235.2 billion shillings against a target of 177.6 billion shillings assuming a pro-rated borrowing throughout the financial year of 229.6 billion shillings budgeted for the full financial year.

The government has only borrowed 205.8 billion shillings of the budgeted foreign borrowing, representing 44.5 percent of its foreign borrowing target of 462.3 billion shillings. Kenya Revenue Authority (KRA) on the other hand has already missed its first half of 2016/17 fiscal year revenue collection target by 3.2 percent and it is expected to miss its overall revenue collection target of 1.5 trillion shillings for the current fiscal year.

Given that the government has less than 2.5 months to the close of the current fiscal year and the fact that borrowing from the foreign market is a much longer process than borrowing from the domestic market, the government is likely to use the domestic market to plug in the deficit that is likely to arise.

This creates uncertainty in the interest rate e­­­nvironment as domestic borrowing may exert upward pressure on interest rates, and result in longer term papers not offering investors the best returns on a risk-adjusted basis.

The government has been on the receiving end of both the opposition and other quarters on its appetite to borrowing from both the domestic and foreign markets. The International Monetary Fund had raised concerns over Kenya’s borrowing spree saying that the skyrocketing debt might be too big for the country to handle. The government has, however, disputed the claims saying that the country was still within the safe brackets of borrowing and that there was no cause for alarm.

The country goes to the polls on the 8th of August and there are fears that the borrowing will impact heavily when the new government begins a new term in office.

 



About Juma Fred

Juma Fredrick is an enthusiastic journalist who believes that journalism has power to change the world either negatively or positively depending on how one uses it. You can reach him on: (020) 528 0222 or Email: [email protected]

View other posts by Juma Fred



Other Related Articles








SOKO DIRECTORY & FINANCIAL GUIDE

ARCHIVES

2018
  • January 2018 (291)
  • February 2018 (221)
  • March 2018 (279)
  • April 2018 (176)
  • 2017
  • January 2017 (183)
  • February 2017 (195)
  • March 2017 (207)
  • April 2017 (104)
  • May 2017 (169)
  • June 2017 (206)
  • July 2017 (190)
  • August 2017 (196)
  • September 2017 (186)
  • October 2017 (236)
  • November 2017 (253)
  • December 2017 (266)
  • 2016
  • January 2016 (167)
  • February 2016 (165)
  • March 2016 (190)
  • April 2016 (143)
  • May 2016 (246)
  • June 2016 (183)
  • July 2016 (271)
  • August 2016 (250)
  • September 2016 (234)
  • October 2016 (191)
  • November 2016 (244)
  • December 2016 (154)
  • 2015
  • January 2015 (1)
  • February 2015 (4)
  • March 2015 (166)
  • April 2015 (109)
  • May 2015 (117)
  • June 2015 (121)
  • July 2015 (150)
  • August 2015 (157)
  • September 2015 (189)
  • October 2015 (171)
  • November 2015 (174)
  • December 2015 (208)
  • 2014
  • March 2014 (2)
  • 2013
  • March 2013 (10)
  • June 2013 (1)
  • 2012
  • March 2012 (7)
  • April 2012 (15)
  • May 2012 (1)
  • July 2012 (1)
  • August 2012 (4)
  • October 2012 (2)
  • November 2012 (2)
  • December 2012 (1)
  • 2011
    2010
    2009
    2008
    2007
    2006
    2005
    2004
    2003
    2002
    2001
    2000
    1999
    1998
    1997
    1996
    1995
    1994
    1993
    1992
    1991
    1990
    1989
    1988
    1987
    1986
    1985
    1984
    1983
    1982
    1981
    1980
    1979
    1978
    1977
    1976
    1975
    1974
    1973
    1972
    1971
    1970
    1969
    1968
    1967
    1966
    1965
    1964
    1963
    1962
    1961
    1960
    1959
    1958
    1957
    1956
    1955
    1954
    1953
    1952
    1951
    1950