Controller of Budget Margaret Nyakang’o warns the state of looming debt crisis and inflation

 

Controller of Budget Ms Margaret Nyakang’o. FILE

 The Controller of Budget Ms Margaret Nyakang’o warns the state of a debt crisis if the National Treasury continues to borrow to meet budget shortfalls.


Margaret explains, "Increased public borrowing may result in undesirable fiscal consequences.”


Public debt sustainability indicators already confirm Kenya faces a high risk of a debt crisis.

President Uhuru Kenyatta administration only has room to borrow Sh590 billion to hit the Sh9 trillion public debt ceiling MPs set in October 2019.

However, the counties have nothing to run their small governments across the country.

 The budget deficit for next year budget projected to be about Sh1 trillion, opening a Sh317 billion budget hole.


The latest Treasury statements show public debt stood at Sh8.41 trillion as of August 2020.


The Controller of Budget signals the debts may draw high-interest rates, increase inflation and overburden future generations.


“The Kenya shilling may also depreciate against the world’s major currencies due to demand for foreign currency to service foreign currency-denominated debt," she said.


The budget controller put the concerns by reviewing the national government spending for the first quarter of the financial year.


Controller of Budget wants the National Treasury to “take appropriate measures to ensure public debt remains at sustainable levels.”