Debt 

DEBT ISSUE 

• Starting July this year, the Kenyan government plans to borrow 703.8 billion to meet its 2024/25 fiscal year budget. According to a report by Cytonn Investments, the debt will be split between domestic (Ksh 377.7B) and other sponsors (Ksh 326.1 B). 

• The public debt is currently at 11 trillion and the Kenya Kwanza regime claims that the budget aims to reduce the budget deficit from 4.9% of the GDP to 3.9% and that this will be facilitated by cutting down expenditure in the government. However, this has been met by a lot of skepticism due to the increase in amounts of money being sent to the Deputy President and President’s office, including a very controversial 0.8 billion shilling conveyed to the public as a confidential expenditure. Other questionable funds are the parliamentary budget increase and the equalization fund, which seeks to bring out equitable fund distribution in the counties among others.

What does this mean for Kenyans?

1. A hike in taxes; The bill that we are protesting has clearly shown the introduction of weird taxes that are not being accounted for and are being thrown around i.e taxes on Cancer treatment, Taxes on Sanitary towels

2. Inflation: the price of basic commodities will rise. Ugali is kenya’s staple food but it has started to become unaffordable. In the previous regimes, a packet of unga (1 kg ) has always been below a dollar but right now it is retailing above that. The punitive finance bill is set to increase with that with punitive clauses such as imposition of 16% VAT on bread an item that is now luxury to Kenyans.

3. Driving up interest rates; according to Cytonn Investments, increase in the interest rates are chasing away investors from the country. For bearer instruments of government, the withholding tax is 15%, while for non-government, it is 25% indicating unfavourable conditions for investors. This is also becoming a problem for local investors because as the government borrows heavily, as it is doing now, from the local market, it drives up interest rates making it harder for borrowing and investments. This slows down economic growth and slows down job creation.

4. Currency depreciation: it has become a notable problem that our shilling is collapsing steadily against the dollar. With more borrowing our currency is under even more risk and a weaker currency makes imports more expensive, leading to higher inflation.

5. Debt servicing pressure: with a debt of Ksh 11T, it will drop on the baggage to future governments to fix this problem. This creates a cycle of borrowing to pay off existing debt leading to sustainability problems as the government will not be able to function abd become loan reliant.

What do Kenyans need done?

1. Cutting down government expenditure; The executive has carried up the bulk of the budget with the office of the president and deputy president receiving extravagant amounts for operational costs. If the government is committed to curb the debt problem then they should cut down their budget.

2. Accountability; We require no stealing of public funds and the leaders are able to account down to the last cent