Kenya should consider slowing its borrowing for President Uhuru Kenyatta’s key legacy projects to pave the way for sustained growth, said the World Bank’s chief economist.
Kenyatta’s “Big Four,” a plan to boost manufacturing, farming, health care and low-cost housing, has put pressure on the treasury to hike spending even as it struggles to grow revenue.
The Treasury expects public debt to climb 11percent to 6,45 trillion shillings ($64 billion) by the end of June from a year earlier.
“It may be better to slow down, perhaps cut back on borrowing, and financing big projects,” Pinelopi Koujianou Goldberg, the World Bank’s chief economist said in an interview last week in Nairobi. “Take more of a long-term perspective and make sure that the way these projects are financed is truly sustainable.”
Kenyatta is racing to deliver 500 000 affordable houses, provide equipment in hospitals, open up new farmlands with irrigation and double electricity-production capacity by 2022 when his term ends.
While there is a provision for private investors to participate in these projects, the government still has to spend to a great extent as well.
The government has so far fallen short on plans to cut non-essential spending to free up money to support the projects, and instead announced in October a new debt ceiling that effectively increased room for additional borrowing. — Bloomberg.