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UPDATE 1-Kenya president says borrowing has fueled economic success
March 15, 2017 / 4:29 PM / 8 months ago

UPDATE 1-Kenya president says borrowing has fueled economic success

* Critics say Kenyatta ups public debt before August polls

* Funds for roads and railways, development, president says

* Concerned over corruption, jobs, slowing credit growth (Updates with quotes, context)

By Duncan Miriri and George Obulutsa

NAIROBI, March 15 (Reuters) - Kenyan President Uhuru Kenyatta brushed off criticism of government borrowing in a state of the nation speech on Wednesday, saying it had funded the most aggressive development drive in the country’s history.

In a speech to parliament laying out his case for reelection in August, Kenyatta said he had also strengthened the judiciary, reformed the electoral commission and overseen the devolution of power over the past four years.

Kenya’s national debt has risen to 50 percent of GDP from 42 percent when Kenyatta came to power, prompting criticism from the opposition. Parliament is probing allegations that millions of dollars have gone missing from the health ministry, National Youth Service and other departments.

No major politicians have been convicted of corruption during his rule despite the auditor general’s scathing reports.

“The borrowing (by) my administration has been ... solely to finance the most aggressive development agenda witnessed in Kenya’s history,” Kenyatta said.

Kenyatta, the wealthy son of the country’s first president, said the economy had expanded by an annual average of 5.9 percent in the last four years, creating 2.3 million jobs.

The government has built 1,950 km of new roads and another 7,000 km are under construction, he said. A new railway will link the port of Mombasa with the capital Nairobi at a cost of 327 billion shillings ($3.18 billion).

In a nod to the many scandals dogging his administration, the president touted the recent establishment of an anti-corruption court but admitted, “we knew that eliminating corruption would be a journey on a rocky path.”

He also said the country’s overall wage bill must be slashed, saying it consumes half of all revenues and “threatens to destroy our development agenda”.

He promised those elected in August would be paid less than their current counterparts. Kenyan lawmakers are among the most highly paid in the world, relative to their country’s GDP.

Kenyatta said private sector credit growth had slowed after the government capped commercial lending rates last September. He pledged to ensure firms could get credit again.

Jobs, corruption and security will all be hot topics in the lead up to parliamentary and presidential elections in August.

More than 1,200 people were killed after a disputed election in 2007 sparked ethnic violence, and Kenyatta tried to assuage fears of another outbreak of violence.

“I urge citizens to exercise tolerance before, during and after the elections,” he said.

But in a sign of continuing insecurity, 11 people were killed in an attack in the western county of Baringo on Tuesday, the Kenya Red Cross said. ($1 = 102.8000 Kenyan shillings) (Writing by Duncan Miriri; Editing by Katharine Houreld and Tom Heneghan)

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