Kenya’s Budget and Appropriations Committee of the National Assembly is proposing an upward review of the debt ceiling to enable implementation of this year’s budget.
Committee Chair Kanini Kega says by end of March this year the stock of public debt was Kes7.34 trillion shillings which is 82 percent of the current 9 trillion shillings Kenya’s debt ceiling, set by the lawmakers.
This emerged during debate on the budget estimates on Wednesday in the National Assembly.
According to the approved budget estimates, the government expenditure under consolidated fund services will increase by 24% to Kes 1.33 trillion in the next financial year starting next month due to an increase in public debt service expenses which constitute 88% of consolidated fund services expenses.
Kega has warned that implementation of the budget hangs in a balance owing to an increase in expenditure against diminished revenue returns.
Owing to this the budget committee is recommending that parliament increases the debt ceiling to give the government wiggle room against current shrinking budget flexibility.
In FY 2021/22 it is estimates that executive expenditure will account for 43% of the total annual budget and 65% of total revenue collected.
Kenya’s National Treasury projects a total revenue collection of Kes 2 trillion shillings, an increase of Kes 210 billion shillings year on year, with income tax projected to increase by Kes 102 billion to Kes 835 billion.
However, the budget committee warns that the expected revenue performance was subject to economic recovery against risks such as Covid-19 disruptions, high cost of fuel and political uncertainty.
The committee recommends that Kenya’s National Treasury set up a fund by October 2021 that may be financed through a long term bond for the payment of existing verified pending bills and court awards.
The adaption of the Budget estimates by the budget committee is a preclude to the budget presentation of the 3.66 trillion shillings budget on Thursday afternoon by National Treasury Cabinet Secretary Ukur Yatani.