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Kenya's Debt Distress: Govt Warned to Reduce Borrowing, Cut Taxes to Salvage Falling Economy in 2025

The article from Tuko.co.ke discusses Kenya's escalating debt distress, highlighting warnings from the World Bank and the International Monetary Fund (IMF) about the country's economic situation. Kenya's public debt has surged to KSh 10.1 trillion, with the debt-to-GDP ratio expected to reach 78% by June 2024, surpassing the IMF's recommended threshold of 55% for developing countries. The government has been advised to reduce borrowing and cut taxes to mitigate the economic downturn projected for 2025. The article points out that despite these warnings, the Kenyan government has continued to borrow, with significant loans from China and other international lenders. This has led to increased debt servicing costs, which now consume a large portion of the national revenue, potentially leading to a situation where Kenya might struggle to service its debts. The IMF and World Bank suggest fiscal consolidation, reducing non-essential spending, and enhancing revenue collection to stabilize the economy. However, the government's approach has been criticized for not addressing the root causes of the economic strain, potentially leading to a more severe economic crisis if corrective measures are not implemented promptly.

Read the Full Tuko Article at:
[ https://www.tuko.co.ke/business-economy/576420-kenyas-debt-distress-govt-warned-reduce-borrowing-cut-taxes-salvage-falling-economy-2025/ ]