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Swelling public debt interfered with SGR extension to Kisumu, Yatani

Yatani has told parliamentarians that the government was already feeling the heat over its public debt load, hence decision to instead reactivate the Metre Gauge Railway (MGR) line linking Naivasha to the lakeside city/FILE

NAIROBI, Kenya, Feb 28 – Kenya’s swelling public debt was the reason behind the government’s decision to stop plans of extending the Standard Gauge Railway (SGR) to Kisumu.

Treasury Cabinet Secretary Ukur Yatani told parliamentarians Thursday that the government was already feeling the heat over its public debt load, hence the decision to instead reactivate the Metre Gauge Railway (MGR) line linking Naivasha to the lakeside city.

“Because of our uptake of loans, we felt the project was going to constrain our budget, therefore the decision to propone the project,” said Yatani.  

The construction of the rail was halted last August after the government failed to secure an expensive Sh368 billion loan from China.

  • Borrowing Locally

Yatani said the government will continue borrowing domestically even as it works on reducing the amount of money borrowed.

“I do not want to raise your expectations too high as we cannot say that we will stop borrowing locally, but we have a plan which will assist in reducing the rate at which we borrow as a country,” Yatani said.

He was presenting his submissions on business laws amendment bill 2019 to the finance and planning committee Thursday.

As of October 2019, Kenya’s total domestic debt was Sh2.836 trillion, while the total external public liability was Sh3.066 trillion to total to Sh5.902 trillion.

In the same month, Parliament approved the increase in debt threshold to Sh9 trillion saying this would ensure that the National Treasury had enough funds to meet its annual budget henceforth.

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