Kenya has reached a debt ceiling of Sh11.2 trillion. The country cannot receive new loans until it partially settles its outstanding debt.. The country looks at loan defaults or blacklists from foreign loan agencies.
President William Ruto will solely depend on local loans, which have now reached 55%. People have blamed the government for reckless spending and borrowing, despite no significant progress in the past two years.
IMF now pressures President William Ruto to introduce more and more taxes to pay the rising debts. President William Ruto tenure has secured more than Sh 3 Trillion loans.
The National Treasury has endorsed the Finance Bill’s suggested tax measures, claiming that the nation’s massive debt drove the decision to enact new and higher taxes.
In his appearance before the Finance and Planning Committee on Tuesday, June 11, Treasury Principal Secretary Chris Kiptoo stated that the nation was struggling with a Ksh11 trillion debt.
He claimed that Kenya will greatly benefit from the new tax policies in controlling its soaring debt and lowering its national debt stock.
He pointed out that the goal of the Finance Bill was to earn Ksh346 billion in order to contribute to the 2024–2025 budget, which is presently awaiting acceptance by parliament.
Kiptoo went on to warn that the nation had reached its peak and that additional debt was unnecessary.
“The huge public debt influences the tax measures we are taking; we feel we must generate our income rather than be dependent on debt to finance our budget,” said Kiptoo.
“Taking into account the requirement to mobilise sufficient revenue to stabilise our debt, I urge the Committee Members to favourably evaluate all of the proposed measures in the Finance Bill, 2024,” he stated.
In his evaluations of the committee, Kiptoo pointed out that the public debt had grown dramatically from Ksh46 billion in 2010 to 70% of GDP, a significant increase.
The PS stated that of the Ksh11.2 trillion in governmental debt, 45 percent was domestic and 55 percent was external.
“We are carrying out tax policy changes guided by study findings to enhance the development of a progressive tax system that optimizes tax revenue collection and expands the tax base,” stated the PS.
Kiptoo’s remarks occur just one day after the National Treasury and the International Monetary Fund (IMF) came to a staff-level agreement regarding the Ksh126 billion ($976 million) payout.
The IMF asked Kenya to amend its 2024–2025 budget to include extra revenue-raising measures at the same time that it announced the disbursement.
The IMF claims that Kenya could reduce its debt, which had caused the nation to enter a financial crisis, with the help of the fiscal reforms included in the Finance Bill.
“Authorities have taken decisive steps towards fiscal consolidation by introducing several measures in the context of the draft 2024/25 Budget and the 2024 Finance Bill,” the lender said.