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Kenya must urgently end the practice of borrowing to fund recurrent expenditure since it poses significant threats to the nation’s economic future. This unsustainable approach drains resources that could be used for development, undermines fiscal stability, and entrenches long-term economic vulnerabilities.

By prioritising short-term needs over sustainable financial management, the government is effectively shifting the burden of its inefficiencies onto taxpayers, exacerbating the challenges faced by citizens and businesses alike.

While recurrent expenditures – such as salaries, pensions, and operational costs – are essential for the functioning of government, they do not generate economic returns. Funding these obligations through debt is a short-sighted strategy that compromises fiscal health and reduces the country’s capacity to invest in critical areas that drive growth and resilience.

When the national and county governments use a large percentage of revenue to meet day-to-day expenses, it diverts resources away from productive investments that could spur economic growth, such as infrastructure, education, and healthcare.

This practice forces the government to rely heavily on taxation to bridge the resulting fiscal deficits. The rising tax burden reduces disposable incomes for households and increases the cost of living, further straining the already struggling population.

Additionally, excessive domestic borrowing to fund recurrent expenses drives up interest rates, making it more expensive for businesses and individuals to access credit.

Kenya’s growing public debt, which stands at 65.7 percent of GDP, highlights the unsustainable nature of borrowing for non-productive purposes. While the debt-to-GDP ratio has shown a slight decline from previous levels, this improvement is primarily due to external factors such as currency appreciation rather than meaningful fiscal reforms.

Continued borrowing for recurrent expenditures only deepens Kenya’s debt crisis, leaving less fiscal space for future development projects and exposing the country to economic shocks.

The government must focus on long-term solutions to balance its budget and reduce reliance on debt. Reducing wasteful spending, curbing corruption, and implementing equitable tax reforms are essential steps to improve fiscal discipline. Setting up a good environment for investments in productive sectors is the only sure way to generate sustainable revenues and will help reduce the need for recurrent borrowing.