Policy Brief No. 29 of 2023/2024 on Public Borrowing with Multiple Shocks: Status and Policy Options

Abstract

Kenya has faced a couple of shocks since 2020, which mainly include the COVID-19 pandemic in 2020, drought in 2021, and the Russia-Ukraine war that began in February 2022. These have had implications on government expenditures as the Government worked towards safeguarding the lives and livelihoods of citizens against the adverse effects. The COVID-19 pandemic not only posed a serious risk to public health but also interrupted international supply chains, affecting trade and the domestic economy. At the same time, persistent droughts have put a burden on the nation’s agricultural sector, causing a shortage of food and water and endangering the livelihoods of many Kenyans. Additionally, the Russian-Ukraine crisis had implications across the globe, altering geopolitical dynamics and the stability of the world, largely affecting commodity prices internationally and domestically. These concurrent shocks highlight the interconnection of world affairs and the need for Kenya to navigate difficult times while ensuring that the citizens are cushioned from adverse effects.