President William Ruto during the National Solemn Assembly at the Nyayo National Stadium, Nairobi on February 14, 2023. [Kelly Ayodi, Standard]
The Kenya Kwanza administration is seeking to replace the Sh10 trillion debt ceiling with a debt anchor at 55 per cent of the Gross Domestic Product (GDP) if Parliament adopts the proposal by Cabinet.
In a Cabinet Meeting chaired by President William Ruto cabinet resolved to adopt proposals by the International Monetary Fund to have the country's debt ceiling capped at 55 per of the GDP.
This move was in the process of implementation by the Jubilee administration but Parliament rejected the proposals.
Then Treasury Cabinet Secretary Ukur Yatani had sought to replace the debt ceiling with a percentage measure against the GDP but parliament rejected it and instead increased the ceiling to Sh10 trillion.
If adopted, it then means that Kenya is already in breach of the proposal since her debt is above 70 per cent of the GDP, presenting a headache for the Ruto administration to scale back the figure.
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Kenya already owes more than Sh9 trillion and going by the cabinet proposal that figure should be scaled back to less than Sh6 trillion.
With the proposal awaiting approval, Ruto and his ministers will now be scratching their heads to raise revenue generation and collection to offset some of the debt in order to realize their own proposal.
Already the Kenya Revenue Authority (KRA) has stopped tax reliefs with effect from February 28, 2023.
KRA says this move is in line with Ruto's plan to enhance revenue collection and redirection of resources to finance priority growth supporting programs as well as power the Bottom-Up transformation agenda.