Central Bank of Kenya (CBK) Governor Dr Patrick Njoroge commended President William’s Ruto directive to cap borrowing, in a bid to tame ballooning debt.
Speaking to Bloomberg on Wednesday, January 18, Dr Njoroge noted that measured borrowing in Kenya will make the economy grow by 6.2 per cent.
This is a significant growth from 2022 when the country experienced a 5.6 economic growth according to Njoroge who was attending the World Economic Forum in Davos, Switzerland.
“We are getting respectable growth this year due to measured borrowing which has enabled us to tackle debt vulnerabilities and ensure sustainability,” the Governor remarked.
While in an interview with CNBC International TV, the CBK Governor further revealed how recent debt management has steadied Kenya’s economy.
“We are in a good situation now because we have managed our debt situation quite effectively.
Njoroge announced that for the last three years, Kenya was not able to limit borrowing because of the pandemic that disrupted economies across the world.
“In the run up to the health crisis, we were poised to begin bringing down debt levels but the pandemic forced us into a multi-lateral borrowing,” he explained.
The Governor though noted that Kenya was able to recover quickly post-pandemic.
“We benefited from having a diversified economy and limited exposure to global economic undercurrents.
“We are very local or regional in terms of trading partners,” Njoroge revealed why the economy was poised to grow in 2023.
He affirmed President Ruto’s commitment that the country will not default on its debt.
“From the perspective of all our debt investors, they should not have any concern because we are managing it well and repaying.
“There is no possibility whatsoever that Kenya can default on its debt,” the CBK Governor assured lenders.
On January 4, 2023, Ruto through a media interview affirmed Kenya will repay all its debts.
"This country of ours will not default. I want to give you, my assurance. Our country will not default on our obligations. We have applied brakes on any more borrowing," the President affirmed.
To limit borrowing and be able to make timely repayments, Ruto announced that the government will slash its budget by Ksh300 billion.
“Going forward, we will not be borrowing to finance recurrent expenditure because it is not right, prudent, or sustainable.
“To this end, I have instructed Treasury to work with Ministries to find at least Ksh300 billion in this year’s budget so that we can remove it because the market cannot sustain the kind of borrowing, we are doing as a government,” the President announced in his address to a joint Parliamentary sitting on September 22, 2022.
