The World Bank is now warning Kenya on cutting expenditure meant for development saying it will only slow down the county’s growth but rather Kenya should cut spending in the public sector wages and other recurring items to reduce the debt load.
The lender says there is a need to re-calibrate the balance between development and recurrent expenditures, with the latter bearing a higher share of the expenditure containment.
Allen Dennis, World Bank Senior Economist says while progress is being made to advance the “Big 4”, given the ambitious nature of these objectives, it calls for accelerating the pace of structural reforms, particularly in areas that help crowd in the private sector to advance the “Big 4”.
Additionally, the lender says the Kenyan government could cut recurrent spending by reducing state-owned firms’ budgets and by regularly auditing the government’s payroll.
The lender has also raised the estimate for Kenya’s 2018 economic growth to 5.7 per cent, from a previous forecast of 5.5 per cent.
This follows the July pronouncement by President Uhuru Kenyatta issuing a directive prohibiting all government accounting officers from approving funds for new projects until all the existing ones are fully completed.
Kenya is under pressure from the International Monetary Fund (IMF) reduced its fiscal deficit to 7 per cent of gross domestic product and has set a target of 5.8 per cent of GDP this fiscal year.
The current national debt stands at 58% of the country’s gross domestic product up from 42.8% in 2008.