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By Otiato Guguyu and Dominic Omondi | Updated Sat, April 15th 2017
The World Bank (WB) has fired a warning shot at the Government for using debt to settle recurrent expenditure.
In a new report on the state of the Kenyan economy, the global lender says it has noted with concern that Kenya is borrowing more than it is spending on development projects, meaning that the money is being used on wages and for purchasing goods and services.
“Overall borrowing in 2015/16 outstripped development spending by 0.1 percentage points, suggesting a small part of the borrowing financed part of the recurrent spending,” said the bank in its latest edition of Kenya Economic Update.
Last year, the National Treasury planned to borrow Sh700 billion while the development budget was estimated at Sh682 billion. WB says this is an indication that the Government is going against a legal requirement that debt be used solely for financing investments.
“This is a departure from the fiscal responsibility principles set out in the Public Finance Management Act (PFM Act),” said WB.
The scathing verdict comes just days after President Uhuru Kenyatta assured Kenyans that the Sh4 trillion debt is not going into consumption, dismissing critics who have questioned his administration’s high appetite for debt.
Kenya spent some borrowed money on wages and salaries, says World Bank
The World Bank (WB) has fired a warning shot at the Government for using debt to settle recurrent expenditure.
In a new report on the state of the Kenyan economy, the global lender says it has noted with concern that Kenya is borrowing more than it is spending on development projects, meaning that the money is being used on wages and for purchasing goods and services.
“Overall borrowing in 2015/16 outstripped development spending by 0.1 percentage points, suggesting a small part of the borrowing financed part of the recurrent spending,” said the bank in its latest edition of Kenya Economic Update.
Last year, the National Treasury planned to borrow Sh700 billion while the development budget was estimated at Sh682 billion. WB says this is an indication that the Government is going against a legal requirement that debt be used solely for financing investments.
“This is a departure from the fiscal responsibility principles set out in the Public Finance Management Act (PFM Act),” said WB.
The scathing verdict comes just days after President Uhuru Kenyatta assured Kenyans that the Sh4 trillion debt is not going into consumption, dismissing critics who have questioned his administration’s high appetite for debt.
Kenya spent some borrowed money on wages and salaries, says World Bank
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