The National Treasury estimates that President William Ruto's administration will borrow Ksh607 billion to fill in the budget deficit in the 2023 - 2024 financial year.
According to a report published by the Treasury, the loans will be used to finance part of the Ksh3.6 trillion budget, which is the highest in Kenya's history.
This is even as the government increases taxes, going against President William Ruto's campaign pledge to cut borrowing and look for local solutions to finance the country's budget.
Ruto's administration has ramped up borrowing, taking up loans at higher interest rates domestically to fund government programs.
Kenya will borrow an estimated Ksh270 billion from financial institutions including the World Bank and IMF and other lenders. Already the IMF has approved a loan worth Ksh142 billion for this financial year.
The government also estimates that it will receive Ksh113.4 billion from international organisations and a further Ksh9 billion from foreign governments.
Treasury expects to receive Ksh65.4 billion during the financial year.
In terms of direct payment loans, Kenya will borrow Ksh89.9 billion from foreign governments, and Ksh59.1 billion from international organisations.
During the last financial year, the Treasury noted that Ksh418.99 was borrowed from the domestic market for the 2022/23 financial year against a target of Ksh475 billion.
In terms of external loans Kenya received Ksh155 billion (USD1.9 billion) for project loans. IMF disbursed Ksh83.9 billion (USD589.43 million) and Ksh113 billion in syndicated loans were taken.
"The total external disbursements amounted to Ksh526 billion(USD3.47 billion). The principal external repayments for FY 2022/23 amounted to Ksh237 billion (USD 1.67 billion). Largely the funding programme for the year was a success amidst turbulent global financial markets," Treasury stated.
Ruto's Stand on Loans
Ruto was a critic of his predecessor Uhuru Kenyatta's borrowing. Instead, he opined that the government needed to focus on raising its own revenue through taxes and empowering its citizens. However, the Kenya Kwanza has continued to borrow.
"When everyone is empowered, citizens are able to pay taxes and the government will have enough revenue. We will not resort to lenders like China to extend loans to us. These loans we have acquired are bringing us bad luck,” the President stated in 2021 at a church service in Kakamega County.
Nonetheless, Ruto's allies have defended the borrowing explaining that Ruto was also working to pay back the loans taken.
"In the supplementary budget, we reduced the fiscal deficit to 3.7 per cent of the GDP. Right now, it is at 4 per cent of the GDP. We expect to reduce it to 3.6 per cent in the next budget," Kiharu Member of Parliament Ndindi Nyoro stated.