President William Ruto has said the country’s economic recovery strategy has stabilised the economy even as majority of the impoverished Kenyans agonise over high cost of living and unemployment.
Speaking yesterday during an interdenominational thanksgiving service at Kirubia Stadium, Chuka, Tharaka Nithi County, the president said the government has reversed bad economic policies, including reckless borrowing, that had put the country in great danger.
This comes at a time the Kenya shilling has hit an all-time low against the US Dollar trading at Sh140.
“I am very happy that today the country is on sound footing and we are now well prepared to take it to the next level.” The president noted.
The government scrapped the maize and fuel subsidy terming it unsustainable amid calls by the opposition led by Azimio One Kenya Coalition boss Raila Odinga for the government to reintroduce the measures to cushion Kenyans from the hard economic times.
Yesterday, the president said the economy has responded well to the government’s intervention, noting that the country is now on the path of steady economic growth.
The Head of State said he will work with leaders from across the political divide to advance the country’s development agenda.
President Ruto said the executive is working with the Legislature to ensure the budget for the 2023-2024 financial year is in line with the Bottom Up Economic Transformation Agenda.
He said he was keen on increasing funds meant for agriculture and value addition to not only create wealth for farmers but also lower the cost of living.
“We agreed that we will put more money in agriculture because we want to use the sector to ensure citizens have money in their pockets.” He noted.
And in a sharp contradiction to the president’s assertions, a recently released economic report shows that Kenya is expected to record a 4.4 per cent economic growth this year and a further 5.2 per cent in 2024 despite prevailing constraints in the forex market and pressure on debt repayments.
According to Economic Outlook 2023-2024 by Allianz Research, the country is expected to register a 5.2 growth the subsequent year
The 2023 projections are, however lower than policymakers’ GDP growth forecast of 5.2 per cent this year and above 6 per cent in the medium term.
According to Allianz, higher interest payments this year which now accounts for 25.5pc of fiscal revenue could mean less spending on social safety nets and infrastructure projects with immediate benefits which could spur economic growth.
“Interest repayments in Kenya are costing one fourth of the country’s fiscal revenue which is quite high. So the higher it is the less you are going to create projects that will create dividends for Kenya.” Ludovic Subran, Allianz SE Chief Economist said.
In the year to December 2022, Kenya’s total public debt rose to Sh9.15trillion, with domestic debt amounting to Sh4.5trillion and external debt of Sh4.7trillion according to latest data by the Central Bank of Kenya (CBK).
“This may complicate the roll-over of maturing debt and widen budget deficits due to increased subsidies and transfers to mitigate the impact of higher energy and food prices on people and companies. In our public-debt-sustainability risk analysis, we have identified several African countries; Egypt, Kenya, Malawi, Tunisia and Uganda as highly susceptible to debt distress.” The report adds in part.