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Kenyans can expect a more austere government after years of unbridled borrowing that financed “conspicuous consumption,” according to its new Treasury Secretary Ukur Yatani.
The government is targeting to contain expenditure below 23% of gross domestic product in the next three years from 27.8% and intends to collect revenue equivalent to 20% of its output, Yatani said. Several attempts by his predecessor, Henry Rotich, to lower the budget financing gap to 3.5% of GDP failed and the fiscal deficit is now projected at 6.3%.
“Days of conspicuous consumption are long gone,” Yatani said during the start of budget-making process for the 2020-21 fiscal year. “We are going to cut our cloth according to our size.”
Yatani was confirmed as head of Treasury in cabinet changes announced on Tuesday that saw President Uhuru Kenyatta appoint allies to key government positions. Yatani had been leading the department on an interim basis since Rotich was indicted on graft charges, of which he’s pleaded not guilty.
Read: Kenyan President Reshuffles Cabinet as Chasm With Deputy Widens
Yatani said future budgets will not automatically increase from the previous year’s and Treasury will “critically” review every financing need.
“In the past our budget has been incremental,” he said. “That will be no more. It has to be needs-based.”
The state will soon publish its debt strategy, Yatani said. Kenyatta’s government has ratcheted up borrowing and has procured more loans than all previous administrations combined. Public debt rose to a record 6.03 trillion shillings ($59.5 billion) in October, according to central bank data.
Treasury projects growth this year will climb to 6.1% from an estimated 5.6% in 2019.
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