Business Daily
Date: 06.11.2015
Page 19
Article size: 179 cm2
ColumnCM: 39.77
AVE: 0.0
IMF official says Sh2.9 trillion public
debt should not be cause for alarm
BY GEOFFREY IRUNGU
Kenya is not at risk of debt distress
despite having borrowed a cumula­
tive Sh2.9 trillion so far, the Inter­
nationa] Monetary Fund resident
representative Armando Morales
said yesterday.
Mr Morales said as long as the
budget deficit — set at 8.7 per cent
in the annual 2015/16 Budget — re­
mains the same and the economy is
growing at the current pace, Kenyans
need not worry about ability to repay
the debt.
The country has only recently con­
tracted a commercial debt of Sh80 bil­
uct (GDP) or national production.
Debt ceiling
However, early this year Parliament
passed the Budget Strategy Paper —
the basis on which the 2015/16 Budget
was made — which stated that the
state is free to contract public debt of
up to 74 per cent of the GDP.
An agreement, recently signed
between the Treasury and the IMF,
also indicates that while the sustain­
able public debt ceiling is 74 per cent
of GDP, the Treasury will endeavour
to bring it down to about 45 per cent
in the medium term.
lion. The first tranche of Sh60 billion
Meshack Onyango, a commis­
raised concern in some quarters that
sioner at the Commission on Rev­
borrowing was increasingly becom­
enue Allocation, said that the debt at
ing unsustainable. A total of Shl55
over 50 per cent could be dangerous
billion is provided for in the 2015/16
for the economy.
Budget as commercial debt. "Addi­
tional borrowing isn't a concern as
long as the deficit remains the same
and the economy is growing as is the
case currently," said Mr Morales. The
IMF boss was addressing participants
at the launch of a report on sub­Saha­
ran African economies. The Bretton
Woods institution forecast that Kenya
will grow at 6.5 per cent th is year and
could hit 6.8 per cent next year.
Total public debt stands at about
52 per cent of the gross domestic prod­
IMF official Armando Morales speaks in Nairobi yesterday: Additional borrowing
isn't a concern as long as the economy is growing as is the case currently, dianangila
Ipsos Kenya ­ Acorn House,97 James Gichuru Road ­ Lavington ­ Nairobi ­ Kenya