CS Ndung’u Leaves Journalists in Awe with Expertise, Tackles National Debt Questions Head-On
On Thursday, June 15, the Treasury Cabinet Secretary, Professor Njuguna Ndung’u. Confronted inquisitive journalists seeking clarification on budget allocations and proposals he made while addressing Parliament.
CS Ndung’u explained Kenya’s debt repayment strategy by elaborating on the fundamental principles of public debt management. He clarified that the national debt represents a country’s financial obligations to its creditors.
“Allow me to educate you about borrowing, which is the act of receiving a loan from a creditor. Governments borrow money for a variety of purposes, including financing wars, constructing infrastructure, and providing social services.
There are several rules governing national debt and borrowing. Included in these principles is sustainability. “The government must ensure that its debt is sustainable,” CS Ndung’u explained, “meaning that it can afford to repay the debt and interest payments without straining the economy.”
He stated that the government of President William Ruto will regularly update the nation on its debt levels. And repayment plans to promote transparency and accountability.
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Additionally, the State will ensure that the government is held accountable for its debt. And that borrowed funds are utilized appropriately.
These principles contribute to the government’s credibility with its creditors. “Third, they ensure that the government uses borrowed funds for their intended purposes,” explained CS Ndung’u.
In addition, the Cabinet Secretary addressed the risks associated with national debt and borrowing, while assuring that the government was putting in place safeguards to prevent Kenya from defaulting.
“The government may default on its debt, which would mean it is unable to repay the principal and any accrued interest. This can result in a loss of confidence in the government, which can impede future borrowing efforts.
“If the government borrows too much money, it can lead to inflation, which can erode the value of the currency and make it more difficult for people to afford goods and services,” explained Ndung’u.
Due to uncertainty about the future, businesses may be reluctant to invest or hire if they have to borrow an excessive amount of money.
“The risks of national debt and borrowing can be mitigated by following the principles of sustainability, transparency, and accountability,” he explained.
As of March 31, 2023, Kenya owes its creditors Ksh9.4 trillion, with China owing Ksh800 billion, Japan Ksh104 billion, and France Ksh101 billion.
The staggering sum of Ksh607 billion was designated for debt repayment in the Ksh3.6 trillion 2023/24 budget.
CS Ndung’u Leaves Journalists in Awe with Expertise, Tackles National Debt Questions Head-On
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