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Thursday, September 16, 2021 – Central Bank of Kenya (CBK) Governor, Dr. Patrick Njoroge, has said the government must take immediate action to manage its ballooning debt before it crushes the economy.

While noting that the Kenyan government has never defaulted on any loan, Njoroge said he was concerned that it is running out of room for further borrowing.

The country’s debt stood at Sh7.71 trillion as of June this year, up from Sh3.62 trillion in June 2016.

The CBK boss, who appeared before the Senate Committee on Finance and Budget on Wednesday, attributed the high indebtedness to the increased fiscal deficit largely due to development expenditure driven by infrastructure projects.

There are also aspects of recurrent expenditure in areas like education, and health, increased guaranteed debt, worsening terms on new loans, such as lower concessions and increased commercial loans

He also cited “exogenous economic shocks” such as drought and Covid-19, and an overarching concern is limited capture of the returns from expenditures (investments) through increased exports, taxes, and faster economic growth.

“Investment in infrastructure should stimulate the economy. Why is it that we cannot capture more returns on the investment in infrastructure?” Njoroge asked.

Njoroge told the committee that the country is heading on a dangerous path if it fails to act on the ballooning debt.

“We need to be clear on the direction debt is taking us. 

“The time is now. We don’t need to wait until it is crashing us,” Njoroge told the shocked committee members.


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