* 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 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