Kenya is set to pay the Export-Import Bank of China Ksh147.9 billion upon the approval of the proposed Ksh4 trillion 2024/2025 Budget.
According to Bloomberg, part of the budget allocation will be used to settle the multi-billion loan that the country took years ago.
However, the move has not augured well with the Members of Parliament who now fault China for plunging the country into debt distress.
In a parliamentary session, the legislators accused the previous regimes of acquiring costly loans from China, a situation that will now force the government to part with billions.
“It is imperative to implement measures to curtail these expenditures and create fiscal space for development,” the lawmakers decried.
In the forthcoming financial year beginning July 1, Kenya will spend Ksh1.8 trillion in debt servicing with Ksh590 billion channelled into external debt repayments.
Among the external debts include Eurobonds and syndicated loans which are set to consume 35% of Kenya’s foreign debt payments.
Additionally, in the coming fiscal year, Kenya will also pay Ksh84.5 billion to the World Bank.
The country will also spend Ksh83.9 billion in loan repayment to the African Development Bank and Ksh14.8 billion to the International Monetary Fund (IMF).
In 2021, Kenya opted to sign into the IMF program to mitigate its debt vulnerability amid its bulging loan repayments that have now rendered the economy into debt distress.
The government is currently on the verge of enacting the Finance Bill which proposes several tax measures aimed at alleviating the country's exposure to debts.
Treasury Principal Secretary Chris Kiptoo, while appearing before the Finance Committee on Tuesday, June 11 disclosed that the country was grappling with a debt of Ksh11 trillion.
According to him, the new tax measures were informed by the country's huge debt and that the Finance bill would greatly help the country manage the multi-trillion loans.
"The huge public debt informs the tax measures we are taking, we feel we need to raise our revenues rather than relying on debt to finance our budget," Kiptoo argued.
“Considering the need to mobilize sufficient revenue to stabilize our debt, I urge the Committee Members to favourably consider all the proposed provisions in the Finance Bill 2024," he added.
