A report by the United Nations, World Economic Situation and Prospects 2024, has warned Kenyans of increased fiscal pressure in 2024.
According to the report, taxpayers will be subjected to increased levies as the government grapples with reduced revenue, as most of the money collected will be channelled to the repayment of the maturing Eurobond.
Kenya was listed among South Africa and Egypt in the list of taxpayers set to be overburdened with new fiscal policies.
Owing to the increased debt, Kenya is estimated to spend over 20 per cent of the tax revenue on interest payments.
"Due to high and rising debt-servicing burdens, essential government spending on education and health care is taking a back seat in public expenditure allocation," read part of the report.
The reports revealed that the borrowing costs for African countries are approximately four times higher than those for developed countries.
Additionally, the UN noted that the debt sustainability challenge will continue to undermine growth prospects in African countries.
Fortunately, the African Union is working on establishing an independent credit rating modality to provide balanced and comprehensive risk evaluations for African Countries and lower their borrowing costs in international financial markets.
Kenya's Debt
President William Ruto vowed to ensure Kenya is self-sufficient by repaying all the debt accrued by previous regimes and, at the same time, improving the country's economic state.
In November, Ruto warned of tough times ahead as the country readies to repay its pending debt, including the Ksh500 billion Eurobond.
This was the first installment in the repayment of the USD2 billion Eurobond set to mature in 2024.
"We have had to make hard decisions and make painful choices because we owe the people of Kenya to do the right things and to confront facts as they are," he stated while addressing Parliament.
Besides the Eurobond, Kenya has accessed loans from the World Bank, the International Monetary Fund (IMF), African Development Bank (AfDB) among other global lenders.
In 2023, Kenya was among five countries downgraded by three major international credit rating agencies, including Moody's, Standard & Poor's, and Fitch. The financial institutions warned that Kenya risked defaulting on the credits.