Kenya: Prime Cabinet Secretary Mudavadi Blames Drought, Debt, Weak Shilling for High Prices of Goods
Nairobi — Prime Cabinet Secretary Musalia Mudavadi has attributed the current high prices of food to reduced agricultural production and drought effects.
The Chief CS disclosed that public finances are not in good order, resulting in fiscal distress.
“This is a fact we can no longer deny that our public finances are not in good order,” the Prime CS said.
“The overall fiscal deficit including grants for the period of March 2023 was Ksh 369.3 billion which is 2.5 percent of GDP against a target of Ksh 579 billion which is 4 percent of GDP.”
Mudavadi said this while answering a question raised by Kamukunji MP Hassan Yusuf.
He further noted that fiscal stress was also reflected in the pressure of the public debt, which consumes a substantial portion of the country’s budget.
“In fact interest cost now is now the single largest expenditure item in our recurrent budget exceeding the wage bill and county equitable share,” he said.
“Our total debt is Ksh 9.4 trillion against the debt ceiling of Ksh 10 trillion, consisting of external debt of Ksh 4.8 trillion and domestic debt of Ksh 4.5 trillion as at the end of March 2023,” added Mudavadi.
The former deputy prime minister also blamed competitive foreign exchange rates, highlighting the depreciation of the Kenyan shilling against major international and regional currencies.
“Kenya shilling exchanged at an average of Ksh 134 per US dollar in April 2023 compared to Ksh 117.29 in June 2022,” he said.
“The volatility in the global financial markets has surged amid significant strengthening of the US dollar against major currencies and rapid changes in policy stands in advanced economies in response to inflationary pressures.”
The land economist noted that the exchange rate impacts directly on the cost of living in Kenya as imported goods and services become more expensive.