The Central Bank of Kenya (CBK) informed Parliament that the government has expended over three-quarters of its emergency funds at the CBK within six months, leaving only a quarter remaining.
The emergency fund, approximately KES 97 billion for the FY 2023/2024, is designated to assist the government in managing financial challenges by balancing income and expenses during difficult times. According to the CBK Act, the fund’s limit is set at five percent of the government’s audited accounts’ gross recurrent revenue from the previous year.
CBK Governor Kamau Thugge shared this information during a presentation to the National Assembly’s Public Debt and Privatisation Committee, stating, “As of October 30, 2023, the available reserve is KES 23.1 billion, with KES 73.9 billion utilized.”
This substantial use of emergency funds suggests continued borrowing by the Kenya Kwanza government, despite it being only six months into the financial year. This raises concerns about potential financial challenges for the government.
To ensure clarity, the CBK Act mandates regular disclosure of transactions in which the Central Bank lends money to the government, including the borrowed amount and terms. Recent information from the National Treasury indicates that Kenya’s loan repayments are increasing faster than the money collected from taxes, potentially leading to a debt crisis.
Treasury Cabinet Secretary Njuguna Ndung’u has acknowledged this challenge, citing lower-than-expected revenues that could impact the government’s ability to fulfill its promises. The widening gap between revenue and government debt raises questions about the economy’s recovery and the government’s ability to meet its repayment obligations.
The disclosed borrowing trends raise concerns about the country’s fiscal health, necessitating a careful reevaluation of economic strategies. As Kenya addresses these challenges, the focus remains on restoring investor confidence, ensuring economic resilience, and navigating a path toward sustained financial stability in the future.