Ruto’s Record-Breaking Borrowing in Kenya
In his first nine months in office, President William Ruto’s administration has borrowed more than Ksh1.2 trillion, surpassing the amount former President Uhuru Kenyatta borrowed in his first year.
The Kenyan government borrowed Ksh437 billion in Uhuru’s first year in office and an estimated Ksh874.5 billion from 2013 to 2015.
Ruto, who committed to reducing borrowing while running for office, has received Ksh419.46 billion from Kenyan lenders and Ksh716.92 billion from international markets since September of last year.
This increase in debt is intended to stabilize government finances, assist in funding projects and salaries, and increase foreign reserves to safeguard the shilling from depreciation.
Breakdown of External Disbursement
The International Monetary Fund (IMF) approved Kenya’s latest request for a Ksh142 billion loan on Monday, July 17, bringing the total quantity of money disbursed by the IMF in the past year to Ksh229.73 billion.
This was Kenya’s greatest loan from the IMF program, with Ksh87.73 billion being the second-largest in December 2022 during the fourth review.
Subsidiary Loans From Banks
The government received Ksh127 billion on 19 May 2023 from a consortium of international lenders consisting of CitiGroup of the United States, Standard Chartered Bank of the United Kingdom, South Africa’s Standard Bank, and Rand Merchant Bank.
Two weeks later, Kenya received Ksh141 billion in budgetary assistance from the World Bank.
In addition, the country secured a syndicated loan of Ksh70.55 billion in July 2023, which is expected to fund development initiatives approved during the 2023/2024 fiscal year.
According to the most recent information from the Central Bank of Kenya (CBK), Ruto borrowed Ksh137,48 billion between September and November of 2022. In September, Ksh50.42 billion was borrowed, followed by Ksh21.85 billion in October, and Ksh65.21 billion in November.
In direct opposition to President William Ruto’s pre-election pledges, the increase in the public debt reflected the government’s expanding appetite for borrowing.
In March 2023, President Ruto’s Cabinet approved a debt ceiling increase from the initial limit of Ksh10 trillion to a debt anchor of 55% of the country’s Gross Domestic Product (GDP).
Debt Stress
According to the Central Bank, the annual growth rate of Kenya’s Gross Domestic Product (GDP) in 2022 was 4.8%.
In the meantime, the Kenya Kwanza government has been compelled to allocate Ksh7 trillion to debt servicing over the next five years.
In November 2022, Treasury Cabinet Secretary Njuguna Ndung’u expressed concern regarding the country’s debt stock, stating that there was little space for borrowing.
This occurred at a time when the Kenya Revenue Authority (KRA) was under intense pressure to raise more revenue to fund election-related development initiatives.
The Kenya Kwanza government allocated Ksh578.4 billion to debt service during Ruto’s first six months in office, compared to Ksh501 billion during the same period under Uhuru.
Economic experts have accused Ruto of doublespeak because the Head of State has emphasized that his government will not borrow, even though the government has been on a borrowing binge.
Ruto urged the Kenya Revenue Authority (KRA) to tighten its policies and close all corruption vulnerabilities to meet its Ksh4 trillion revenue collection goal.
KRA collected Ksh928.1 billion in Ruto’s first six months in office and is projected to collect Ksh2.57 trillion in the 2023/24 fiscal year.
Kenya’s Debt History
Mzee Jomo Kenyatta, the founding president of Kenya, inherited a debt of Ksh1.72 billion and left it at Ksh1.17 billion upon his death in 1978.
Daniel Moi borrowed a total of Ksh630 billion during his 24-year presidency, while Mwai Kibaki left the country indebted to the tune of Ksh1.8 trillion.
Former President Uhuru Kenyatta, Kenya’s fourth president, is commonly associated with the country’s significant debt burden.
Kenya’s debt reached Ksh8.7 trillion during his presidency, a significant increase from the Ksh1.8 trillion debt bequeathed by President Mwai Kibaki.
Ruto’s Record-Breaking Borrowing in Kenya
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