NAIROBI, Kenya Feb 14 – President William Ruto says he is focused on reorganizing the economy amidst the warnings that the government might fail to implement its manifesto due to a cash crisis.
The Head of State who appeared to differ with the Parliamentary Budget Report that warned against measures to cut government spending mentioned that the regime will focus on cutting the debt appetite.
President Ruto pointed out that his administration was slated to borrow Sh1.2 trillion to implement its manifesto but through austerity measures, they have rewired it to Sh830 billion.
“We have not stopped borrowing but we have reduced to mean that they are things that will move slowly. If you ever find yourself in a hole, then the first thing you do is to stop digging deeper,” President Ruto said.
President Ruto further sustained blame on his predecessor Uhuru Kenyatta for the current economic crisis that the country is facing.
When he was sworn in September last year, he pledged to reduce government expenditure by Sh300 billion with the aim to limit external borrowing and reduce Kenya’s public debt.
Even so, the Parliamentary Budget Office (PBO) has warned the measures to cut government spending will ultimately be detrimental.
With the global recession, the PBO advised the government to inject money into the economy and that cannot be achieved by reducing government expenditure.
“Despite the perceived gains of fiscal consolidation on debt accumulation, conventional wisdom indicates that this is likely to have a contractionary effect on economic activity, at least in the short run,” said PBO in a recent report.
The PBO instead advised the government to focus on empowering the private sector as a means of fostering productivity which will in turn boost the economy.
“Economic theory heralds that in order to spur economic production in times suchas what Kenya is currently facing, the economy requires injections into the financial system,” read the report.
The country’s public debt crossed the Sh9 trillion mark for the first time in December, pushing the country closer to hitting the Sh10 trillion ceiling set by Parliament in June last year.
The National Assembly in June last year increased the public debt limit to Sh10 trillion to allow the government to borrow KSh846 billion to plug the budget deficit in the 2022/23 financial year.
