Why Kenya’s next government might face Sh3.3 trillion budget cash crunch

Kenya’s treasury CS Ukur Yatani [Image: @ukuryatani/Twitter]
Kenya—As Uhuru braces to step out of office, his successor could be faced with pressure to fund the Sh 3.3 trillion budget proposed by the National Treasury in the Jubilee administration’s final lap.

The proposals by the Treasury show that state spending will increase by over Sh300 billion compared to the current financial year. The current administration will have barely two months to implement the budget meaning the next team will be left with the task of meeting the projected shortfall.

The 2022 Draft Budget Policy statement also reveals that the debt stock would rise to Sh9.4 trillion, above the Sh9 trillion ceiling set by MPs in October 2019.

Treasury projects that the debt stock will be at Sh8.6 trillion at the end of this financial year.

This means the next administration will have no more room to borrow to fund the Sh86.7 billion deficit.

Treasury has projected that Sh263 billion will be sourced from foreign lenders and Sh483 billion domestically, a move that will only be possible if MPs adjust the debt ceiling.

Deputy President William Ruto and ODM leader Raila Odinga are the frontrunners in the President Kenyatta succession race.

At the time they will take over the government, the recurrent expenditure is projected to increase by Sh71 billion while interest payments would be up by Sh117 billion.

The interest payments both external and internal debts are set to increase to Sh687 billion from the current 560 billion, a difference of Sh82 billion.

The new team, the Draft Bps shows, will also have to raise an additional Sh13 billion to meet pension expenses, currently at Sh137 billion.

It was projected in the current budget that the President and MPs are likely to get Sh918 million sendoff perks, inclusive of gratuity payments to the DP and two parliament speakers.

It would be interesting to note if the coming administration would stick to the policies and measures taken by the current team to cut state spending.

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