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- Nov 25, 2010
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Public debt to GDP is 59.9%, above the 50% threshold
Move could derail fiscal-consolidation plan, PBO says
Kenya’s debt-ceiling review not only shifts the goalposts but also changes the rules on how goals are scored, and that could move the government closer to debt distress.
Lawmakers last week approved the government’s plan to present the debt limit in absolute figures and not as a percentage of gross domestic product. The National Treasury proposed a ceiling of 9 trillion shillings ($86 billion), which allows it to increase borrowing to almost match the size of the entire economy, and would be about double the previous cap of 50% of GDP, with the debt at net present value.
[https://assets-bwbx-io]
East Africa’s biggest economy is trying to balance building new infrastructure while narrowing the hole in its budget. It had about $3.8 billion of stalled projects to build new roads, dams and rail links as of June last year partly because the government didn’t have funds to disburse. It’s cutting spending on everything from travel to printing and advertising, using the savings to complete halted plans before investing in new ones.
“The move effectively removes any restrictions on debt accumulation for the foreseeable future due to the magnitude of the ceiling,” said Jacques Nel, the chief economist for southern and East Africa at NKC African Economics.
Move could derail fiscal-consolidation plan, PBO says
Kenya’s debt-ceiling review not only shifts the goalposts but also changes the rules on how goals are scored, and that could move the government closer to debt distress.
Lawmakers last week approved the government’s plan to present the debt limit in absolute figures and not as a percentage of gross domestic product. The National Treasury proposed a ceiling of 9 trillion shillings ($86 billion), which allows it to increase borrowing to almost match the size of the entire economy, and would be about double the previous cap of 50% of GDP, with the debt at net present value.
[https://assets-bwbx-io]
East Africa’s biggest economy is trying to balance building new infrastructure while narrowing the hole in its budget. It had about $3.8 billion of stalled projects to build new roads, dams and rail links as of June last year partly because the government didn’t have funds to disburse. It’s cutting spending on everything from travel to printing and advertising, using the savings to complete halted plans before investing in new ones.
“The move effectively removes any restrictions on debt accumulation for the foreseeable future due to the magnitude of the ceiling,” said Jacques Nel, the chief economist for southern and East Africa at NKC African Economics.
