Kenya should slow down on borrowing to fund
President Uhuru Kenyatta’s key legacy projects, the World Bank has warned.
Kenyatta’s “Big
Four,” a plan to boost manufacturing, farming, health care and low-cost
housing, has put pressure on the treasury to hike spending even as it struggles
to grow revenue. The Treasury expects public debt to climb 11% to 6.45 trillion
shillings ($64 billion) by the end of June from a year earlier.
 |
| President Uhuru Kenyatta |
“It may be better to slow down, perhaps cut back on borrowing, and
financing big projects,” Pinelopi Koujianou Goldberg, the World Bank’s chief
economist said in an interview on Wednesday in Nairobi. “Take more of a
long-term perspective and make sure that the way these projects are financed is
truly sustainable.”
Kenyatta is racing to deliver 500,000 affordable houses, provide
equipment in hospitals, open up new farmlands with irrigation and double
electricity-production capacity by 2022 when his term ends. While there is a
provision for private investors to participate in these projects, the
government still has to spend to a great extent as well.
The government has so far fallen short on plans to cut non-essential
spending to free up money to support the projects, and instead announced in
October a new debt ceiling that effectively increased room for additional
borrowing.
Still, Treasury
Secretary Ukur Yatani sees a smaller budget gap of 4.9% of gross domestic
product in the year starting in July compared with an estimated 6.3% this
fiscal year under a new plan that envisions more tax collections.
Goldberg’s comments
came after the East African nation’s central bank Governor Patrick Njoroge said
Kenya doesn’t have much room to increase debt, currently at 62% of GDP, and
should consider partnerships with the private sector to fund
government spending.
In November, the International Monetary Fund’s Managing Director
Kristalina Georgieva said Kenya should be cautious in piling on debt after it
amended its borrowing ceiling to match the size of the economy.
Funding the “Big Four” projects within five years of an electoral term
may put pressure on government borrowing and ultimately impede growth, Goldberg
said.
No comments:
Post a Comment