A third of public revenue goes to pay off debt, experts say

By: JAMES KARIUKI

Kenya is using nearly a third of its national tax revenue to service foreign debt which stands at about Sh3 trillion thus adversely affecting provision of essential services.

The Institute of Economic Affairs (IEA) on Wednesday said the payments of both interest and the principal loans had tripled after the government sought foreign donors to fund infrastructural projects within the country.

While the public debt burden stood at Sh1.1 trillion in June 2010, it had risen to Sh2.2 trillion by June 2014 and by July this year the total debt had grown to Sh2.89 trillion, said IEA.

“As at June 2010 the debt servicing charge was Sh148 billion which has now increased to Sh346 billion representing a 134 per cent increase in nominal terms,” said the just released report by IEA.

INFRASTRUCTURE DEVELOPMENT

The government has been on an all-out offensive since 2010 when it sought development assistance mainly from China to help improve the road network, increase water production and enhance energy production from geothermal wells.

Extra funds have also been sunk in construction of the Standard Gauge railway as well as the Lamu Port which will also see a railway line and a road constructed to link Kenya, Sudan and Ethiopia.

As at June 2010, IEA said Kenyans were made to bear an increased tax burden that increased from Sh627 billion to Sh1.13 trillion by June 2014 adversely affecting the lives of locals.

“The debt burden per Kenyan is close to 50 per cent of the Gross Domestic Product which implies that more money is now dedicated to debt repayment than in funding the development agenda,” it adds.

Recently, the government declined to pay a court ordered pay increase for teachers citing lack of adequate funds to meet the demand.

FEW ACHIEVEMENTS

However, notable developments have been made in provision of electricity to Kenyan households, public primary and secondary schools courtesy of development loans.

Funds have also been dedicated to the establishment of an information, technology and communication platform for all government services.

SOURCE: DAILY NATION