Rising public debt worrying, cautions CBA

April 20, 2018
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The Commercial Bank of Africa says that despite the debt being sustainable; it is a threat to the country’s future stability/FILE

, NAIROBI, Kenya, Apr 20 – There are concerns about the sharp increase in public debt due to high fiscal deficits during the last five years.

The Commercial Bank of Africa says that despite the debt being sustainable; it is a threat to the country’s future stability.

Government borrowing rose from Sh2,112 billion in 2013 to Sh4,570 billion, an equivalent of 58 per cent of the country’s GDP in 2017.

At the same time, government revenue performance continues to weaken as seen in the first half of 2017/2018 fiscal year, where government collected Sh717 billion in revenues against a target of Sh803 billion.

The government is taking steps towards consolidation and is expected to enhance revenue collection efforts while rationalizing expenditure to boost fiscal stability,” says the finding by CBA.

Overall, heavy government expenditure targeted at plugging infrastructure gaps has been credited for the strong economic momentum of the last five years.

CBA, however, says that the high dependency on government spending for growth has exposed the vulnerability of the country’s growth prospects to any breaks on public spending.

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