NAIROBI, Kenya Feb 22 – Deputy President William Ruto has cautioned against the government’s over-reliance on foreign loans which he said derails development.
Ruto said it was time the government re-strategized on how to fund its operations and development as opposed to over-reliance on loans.
“This year alone we are going to pay a trillion shillings to service our debts and it is necessary for us to rethink on how we can develop more resources locally and reduce our reliance on borrowing,” he said on Monday in Kapseret in Uasin Gishu County.
Ruto, who has been critical of the government lately following a bittler fall-out with President Uhuru Kenyatta, warned that the government’s increased appetite for loans to finance development in the country would be detrimental and maintained that the Kenya Revenue Authority (KRA) has the capacity to collect enough tax that would in turn finance Kenya’s needs.
Treasury Cabinet Secretary Ukur Yatani admits that Kenya’s debt level is sustainable even though classified as high risk.
“We need to reduce the amount the country is borrowing outside. The youths need to be empowered, given jobs and through that way they will be able to pay taxes which will contribute immensely to the government development agenda,” he said.
President Kenyatta recently asked him to resign instead of criticizing the government from within, to which he responded saying he is in Jubilee to the end as the elected Deputy President.
While restating his position that the clamour for constitutional change in the country through the Building Bridges Initiative (BBI) was a misplaced priority, Ruto emphasized that there is need for the government to focus on the Big 4 agenda that the Jubilee administration had pledged to accomplish.
In his submission before the Senate Finance and Budget Committee, CS Yattani noted that the debt level is “sustainable but classified as high risk”.
In his submissions detailing the 2021 medium term debt strategy, CS Yattani noted that the debt strategy entails active debt management operations to lengthen the maturity structure of domestic debt by issuing more Treasury Bonds and less Treasury Bills and replacing external commercial short-term debts with longer dated debt instruments to smoothen the debt service maturity structure.
While the domestic debt market has been the major source of funding of the fiscal deficits providing about a half of the financing needs, CS Yattani stated that the market remains shallow and dominated by commercial banks.
