NAIROBI (Reuters) – Kenya’s finance ministry wants to peg the government’s debt ceiling at 55% of gross domestic product, with a requirement to provide a reasonable explanation to lawmakers if debt needs to go higher, proposals seen by Reuters on Wednesday showed.
The East African nation raised its debt ceiling to 9 trillion shillings in late 2019 from 6 trillion shillings previously. It has now nearly run out of the additional room to borrow.
The government will be forbidden from breaching the ceiling, unless it is forced by a depreciation of the Kenyan shilling, or a significant balance of payments imbalance, or abrupt fiscal disruptions.
“The (finance minister) shall provide parliament with a written explanation on the said circumstances leading to the breach of the limit and provide a time-bound remedial plan,” the ministry said in a document setting out he proposed changes.
President Uhuru Kenyatta ramped up borrowing when he assumed office in 2013, driving up debt to the current level of more than 60% of GDP, from just over 40% when he took over.
Political critics blame Kenyatta’s government for saddling the country with steep repayment obligations.
The government rejects the criticism, saying the borrowed funds have been spent on infrastructure projects like railways, which are key to sustaining robust economic expansion.
(Reporting by Duncan Miriri; Editing by George Obulutsa & Simon Cameron-Moore)
