East African governments have increased their budgets for next year by a combined total of 20%, using deficit financing, even as many of the other countries in the world are tightening their belts to cater for the new austerity. Kenya’s budget is increasing from $12.9 billion to $17 billion, Uganda’s from $3.6 billion to $4.4 billion, Tanzania’s from $8.2 billion to $9.5 billion, and Rwanda’s from $1.9 billion to $2.3 billion.
East Africa has seen steady economic growth over the past decade, but opinions are divided as to whether this will continue in the immediate future. A very large proportion of government spending in each of the countries goes to paying the salaries of civil servants, and in order to find sufficient money to cover infrastructure, health, education and security, each of the governments will be relying on borrowed money.
Tanzania has already borrowed around $2 billion from various banks to fund a range of infrastructure projects, and plans to borrow another $800 million from international debt markets. Kenya is going to experience a significant increase in government expenses in the coming year with the establishment of 47 new county governments, as required by the new Constitution. The East African countries are all betting that significant economic growth will enable them to repay the loans.