FINANCE – A Pandemic Amidst An Imminent Debt Crunch

How will the changing nature of Kenya’s public debt impact the country’s growth in the future?

Chapter Contents:

PART A: UNDERLYING TRENDS

Owing to unproductive spending and a growing dependence on commercial loans, Kenya is facing a potential debt crisis.

  • Kenya’s debt has been rising since 2013 and growing interest costs are placing downward pressure on government spending.
  • Kenya’s rising debt level has been caused by – among other things – unproductive spending.
  • Over the long-term, certain factors may help avert a debt crisis, such as the attraction of private sector investment, the discovery of oil and demands from youth for fiscal accountability.
 
 

PART B: IMPACT OF COVID-19 ON FINANCE IN KENYA

COVID-19 has placed further strain on Kenya’s challenging financial situation.

 

PART C: CONCLUSION

What might a deeper deficit mean for economic transformation?

  • Narrowing fiscal space may put political pressure on reform efforts already underway.
  • Kenya will need investment to boost private sector growth, alleviate fiscal pressure, and put the country on a path to transformative growth.
  • Channeling appropriate finance requires a clear vision and prioritising strategic projects in the right sectors.