Public Debt, Deficits and Supplementary Budgets

The growth of Kenya’s public debt stock and repayment costs has become a central part of public debate as these directly or indirectly impact the budget, delivery of services and the economy. The public debt includes domestic (stock 50% as of September 2022) and external (stock 50% as of September 2022). This study on the state of Kenya’s public debt, by IBP Kenya, shows that overall public debt has been increasing in recent years. Specifically, at the end of June 2022, Kenya’s total debt stock stood at Kshs 8.6 trillion compared to Kshs. 0.63 trillion two decades ago.

Despite the Supplementary Budgets being crucial in the fiscal space as it addresses unforeseen expenditure needs, the changes made during these decisions are sometimes adverse, as there are possible shifts in the initial funded priorities. Additionally, it has become a platform often used to expand the size of the deficit in recent years. This begs the question, what is the intersection between supplementary budgets, deficit, and public debt?

While the Supplementary Budgets are supposed to address unforeseen expenditure needs, for Kenya, it has become a common feature and part of the budget process, and hardly a financial year ends before the government passes at least two Supplementary Budgets. We must remember that there are no opportunities for the public to participate in this budget decision.

Some of the observations in the recent Supplementary Budgets include:

  • Introduction of new budget lines. Budget cuts to basic services.
  • Transparency on information on Supplementary Budgets remains limited.
  • Sometimes the financial side of the budget changes significantly, but the same does not happen on the non-financial information, i.e., service targets.
  • Limited explanations and justifications for budget adjustments, especially below the MDAs level.
  • Increases underspending rather than curing it.

Public Debt, Deficits and Supplementary Budgets

pdf, 0.41 MB

Abraham Rugo Muriu

Country Manager for Kenya

Abraham Rugo, Ph.D., is the International Budget Partnership’s Country Manager for Kenya and is based in Nairobi. Prior to joining IBP in July 2017 he worked at Institute of Economic Affairs (2007-2013) and as a public sector consultant (2014-2016). He has a wealth of experience working in decentralization, participatory governance, and public finance management in Kenya.

He holds Masters and Doctoral Degrees in Public Management from the University of Potsdam, Germany. He has a passion for home grown solutions to society problems and works to localize and personalize policy matters that are otherwise complicated.

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