Evaluation of the Impact of Increased Government Borrowing on Economic Growth in Kenya.

Abstract

The primary aim of this research project was to evaluate the impact of increased borrowing by the government on the growth of the Kenyan economy. The study targeted institutions like the Kenya National Bureau of Statistics (KNBS), Central Bank of Kenya (CBK) and the National treasury. The study relied on secondary data. During the study, we restricted ourselves to questions relevant to our topic. Data collected was grouped, tabulated and analysed. The conclusion was used to draw recommendation. Since the year 2010, we have seen increased borrowing by the government of Kenya majorly to fund the budget deficit. The government has been borrowing both internally and externally. Internally, the government has been borrowing from financial institutions, the public, etc. through the issue of securities, bonds and bills. While externally the government has been borrowing from the IMF, world bank, developed nations, etc. The study’s main objective was to evaluate the effects of the increased borrowing by the government on the economic growth of our country. Was the impact positive or negative? One specific objective was to establish how development expenditure relates to public borrowing. The other specific objective was to establish whether our current debt level is sustainable going forward given how increased borrowing relates to the growth of the Kenya economy and what should be the way forward. The study was timely and relevant to policy makers, Economists, and other stakeholders in making decisions in matters involving

economic policy and as an answer to research questions. The study acted as base for further future studies in the area. Now that within the last ten years our debt level has grown by approximately six trillion Kenya shillings, the study helped us come up with the answers to the questions raised here.