Good News to President Ruto as He Can Now Borrow More

National Assembly Public Debt and Privatisation Committee  scrapped the KSh 10 trillion debt ceiling, setting the threshold at 55% of GDP.

Committee vice chair Makali Mulu revealed a window of 5% for the current debt threshold at 60%.

In May 2023, the Cabinet approved the transmittal to parliament of the legislative proposals replacing the nominal debt ceiling with a debt anchor at 55% of GDP.

With this, President William Ruto’s government will borrow KSh 76.8 billion from international banks to plug the budget deficit despite promises to cut reliance on debt.

Kenya’s debt hit KSh 9.4 trillion as of March 2023, approaching the KSh 10 trillion debt ceiling.

Treasury PS Chris Kiptoo said they would cut the budget by KSh 133 billion for the 2023/2024 financial year if MPs don’t approve the raising of the debt ceiling.

The lawmakers approved Ruto’s maiden budget at KSh 3.6 trillion, which pegs much of its funding from tax revenue.

Among taxation measures taken by the government include the introduction of the 1.5% monthly Housing Fund deductions from employees.

Ruto complained about the country’s escalating national debt, emphasising the need to follow the example set by former President Mwai Kibaki.

He highlighted the alarming national debt of KSh 9 trillion, stating that Kenya is heading in the wrong direction.

The head of state emphasised the need for self-reliance and reducing dependence on borrowing to avoid the country’s potential auctioning.