Gov’t has allocated adequate funds to service debts, Uhuru

By KBC Reporter/PSCU

President Uhuru Kenyatta has assured Kenyans that there is no risk of defaulting on debts despite the constant borrowing done by the government.

While giving the State of the Nation address at Parliament chambers on Wednesday, the head of state notes that the government has every year allocated adequate funds in the budget for servicing debts.

In addition, the president says that borrowing by the government has solely been for financing development initiatives whose effect will eventually be felt through creation of jobs and help in servicing the public debt in future.

Kenya’s public debt currently stands at 50 percent of the GDP though half of it is in foreign currency. This has led to widespread fear among Kenyans that the constant and huge borrowing would cripple the country’s economy.

‘’Every year since the start of my administration, we have made adequate budgetary provisions to service the debt. I want to assure Kenyans that at no point has the country been at risk of default or shown any inability to pay its creditors,” the president said in his speech.

He says borrowed cash has been spent on capital projects which will create the necessary investment environment needed in the country.

Though Kenya’s GDP has constantly grown at above 5.9 percent since 2013, the president acknowledged that many Kenyans have not felt its impact in their pockets.

He added that, “Our Foreign Exchange reserves have increased from 4.3 months of import cover in 2013 to 5.1 months of cover at the start of 2017. Our revenues from tax collections have increased from 847 billion shillings in 2013 to 1.2 trillion shillings at the end of 2016.”

He however says the infrastructure projects implemented by the government will help create more jobs and new economic opportunities in areas that were previously marginalized.

The president was concerned that the capping of interest rates has limited access to credit by SMEs, pledging to engage the private sector to have the issue resolved.

“I will actively seek to resolve the issue of access to credit for SMEs so that credit can start to flow again to the real drivers of our economy,” the president said.

He noted that his pursuit of economic diplomacy with world leaders and international investors has benefited Kenya’s economy.