In its first six months in office, President William Ruto’s administration borrowed Sh17.4 billion more than his predecessor did, upending the strategy to pay off debt gradually.
According to Treasury data, the new administration borrowed Sh452 billion in loans in the six months leading up to March, which is higher than the Sh434.6 billion its predecessor borrowed during the same time period the previous year.
Analysts had anticipated that the Ruto administration, after pledging to increase tax collections, would reduce new borrowing by a wider proportion. However, the increase in expenditure under the Bottom-Up economic plan, which aims to direct funds to industries that can significantly contribute to the creation of wealth and jobs, has prevented further reductions in the nation’s indebtedness.
After Uhuru Kenyatta raised public borrowing to finance infrastructure projects, Dr. Ruto now has a limited fiscal window to implement his policies. Under Dr. Ruto’s predecessor, who made significant investments in new train connections and other infrastructure, Kenya’s debt climbed more than fourfold to Sh8.66 trillion.
According to the International Monetary Fund, the country’s significant risk of debt crisis was caused by the spike in liabilities. Kenya has emphasized that it cannot ignore its duties to repay debt. The State lowered both recurrent and development spending during the review period, which coincided with the increase in debt uptake.
When comparing the Ruto and Kenyatta presidencies, recurrent expenditures decreased by Sh4 billion to Sh542.6 billion while development expenditure decreased by Sh32.7 billion to Sh106.7 billion. The burden of the soaring public debt, however, has been highlighted by the Ruto administration’s increased spending on loan repayments during the past six months.
In the first six months to March, Kenya paid Sh578.4 billion to cover its debt, up from Sh501 billion in the same period a year earlier. Dr. Ruto previously stated that the government should never borrow money to pay for ongoing expenses because the market could not support such type of borrowing.
Salaries for public employees, airfare for domestic and international travel, and fuel expenditures for the fleet of vehicles used by the government are examples of recurring expenses. In comparison to his predecessor’s Sh866.3 billion in tax revenue over the same period, Dr. Ruto’s team raised Sh928.1 billion.