Effects of Debt Repayments on Economic Growth in Kenya

Abstract

This study investigated the effect of debt repayments on economic growth in Kenya, between 2010-2017. The study was informed by the fact that the government was strongly funding its budgets through public debts resulting into an increase in stock of public debts. The study adopted a causal design. The research focused on a case study in Kenya on economic growth, recurrent expenditure, savings, internal debt and external debt for the period 2000-2017 to determine effects of debt repayment. The study relied on data that was collected from secondary sources including reports by the Central Bank of Kenya (CBK). To analyze the findings, SPSS was used and the presentation was done using tables and figures. It was revealed that recurrent expenditure, savings, internal and external debts significantly influences the growth of the economy. The study recommended that the government should strive to maintain an optimal level of recurrent expenditure in order to improve on economic growth. The study also recommended that the government should encourage more savings in order to positively grow the economy. The government should consider using more external debts and less of the internal debts in financing budget deficits in order to grow the economy.