In recent years, Kenyans have wrestled to take away the bitter chalice associated with high public debt. However, little has been mentioned on how best to formulate a realistic public debt ceiling that can guide economic policy. This certainly cannot be a sustainable approach and policymakers will need to consider other techniques of containing public debt. Fiscal policy under the National Treasury can borrow from this targeting methodology and develop a “yield targeting” approach, in which the desired yield in government securities is explicitly stated and actively targeted. In the United States, for example, yields on the 10-year bond are at 1.59 per cent - way below the 4.2 per cent inflation rate.

Source: Standard Digital June 01, 2021 14:26 UTC