President William Ruto’s administration is set to boost foreign borrowing following a revision of the 2023/24 financial year budget, increasing it from Ksh3.7 trillion to Ksh3.9 trillion.
In a Budget Review and Outlook Paper (BROP) released by the Treasury, the government has raised its foreign borrowing target from Ksh131 billion to Ksh449 billion while reducing domestic borrowing to Ksh411 billion.
The Treasury aims to finance this expanded budget through higher tax revenues and an upward revision of foreign borrowing. Domestic borrowing, as indicated by Central Bank Governor Kamau Thugge, has decreased, although it did not reach the initially projected Ksh316 billion.
The government will now borrow Ksh411 billion domestically, down from the Ksh583 billion approved by parliament in June.
The government’s objective is to lower interest rates and stimulate private sector lending by reducing its reliance on local banks for debt. The adjustments in National Government spending have necessitated these revised expenditure plans.
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The ministerial national government expenses in the budget were initially set at Ksh2.38 trillion but have been revised to Ksh2.4 trillion. Additionally, the Treasury has allocated Ksh1.3 trillion for interest and pensions, an increase from the previously planned Ksh986 billion.
Despite the increase in the National Government’s budget, the equitable share allocated to counties remains unchanged at Ksh385 billion. Regarding this matter, the Treasury has criticized County Governments for not exploring alternative revenue sources as advised by the Constitution.
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County Governors have been accused of failing to utilize the constitutional provision allowing them to borrow with guarantees from the National Government, a window that has remained largely unused since the inception of devolution.
