Let’s learn to live within our means
National Treasury must keenly watch and address its twin challenges of a surging public debt and reduced government tax revenue, if the country is to come out of the second wave of the coronavirus pandemic unscathed.
The first wave dealt a serious blow to the economy, with public debt surging to 65.9 per cent of the Gross Domestic Product in the 2019/2020 Financial Year.
How the government will collect enough revenue and service the surging debt which has hit a record of Sh7 trillion, is the elephant in the room even as Treasury mandarins indicated the country may not be in the market for loans.
The first wave of the pandemic gobbled up close to Sh1 trillion, but with the sudden surge in Covid-19 infections and fatalities, East Africa’s largest economy is caught between a rock and a hard place.
Let’s face it, Kenya’s reaction when the scourge first landed on our shores resulted in mixed outcomes. Indeed, all indications are that we are not only short of a sustainable strategy, but shadowfighting for solutions.
What is clear, though, is that the country cannot withstand another round of enhanced economic closure.
With development goals having suffered significant setback, the country is now facing the onerous task of returning to a path of sustained and inclusive growth.
Worse still, some of the economic and social actions put in place to cushion vulnerable populations, including easing of the monetary policy, loan restructuring and temporarily cutting tax rates, dug deep holes in the economy which will take some time to fill.
The big question, however, is whether Kenya will continue going for more loans when the country gobbles up close to 60 per cent of all revenue collected internally to repay borrowed funds.
With debt-related vulnerabilities already crystallised amid weaknesses in State-owned enterprises, Treasury must critically look at all the options on the table with an eye on the future.
It must somehow find a way of raising funds to spur economic growth amid Covid-19 uncertainties.
But as the pandemic continues to bite, Kenyans must increasingly learn how to live within their means, otherwise the country will take many years to recover from pandemic shocks.