The big lenders behind Kenya’s soaring debt

 

Kenya’s debt to external lenders hit Sh6.08 trillion at the end of last year, on new disbursements and a weakening shilling.

Data by Treasury reveals owings to the Bretton Woods institution increased by 38 percent and now account for more than half of total owings to multilateral debt.

The World Bank and IMF combined account for 72 percent of the multilateral owings yielding a sum of Sh2.21 trillion.

According to the report, the outstanding value of Eurobond as at end of 2023 crossed the Sh1 trillion mark to stand at Sh1.11 trillion.

Other lenders to Kenya that also reported significant growth over the one year include China (16 percent), ADB (38 percent), and IMF (17 percent).

China’s debt to Kenya last year grew by Sh129 billion to Sh939 billion nearing Sh1 trillion.

Kenya’s debt-to-GDP ratio hit 70 percent, the second highest in the region after Burundi with 72.7 percent on account of disbursements and shilling depreciation.

The shilling weakened by 26 percent last year the worst depreciation in close to three decades attributed to rising rates offered by investments abroad that led to massive outflows that led to scarcity of hard currencies.

Domestic debt which accounts for 45 percent of the total government borrowing grew by Sh580 billion last year.

The Stock of T-bills dropped by Sh8.72 billion to Sh546.9 billion while T-bonds increased by Sh46.9 billion to Sh4.27 trillion in December 2023.

According to National Treasury, the cumulative public debt servicing cost amounted to Sh600.73 billion which was 32 percent of the revised estimate as at December last year.

This year, the IMF through the Extended Fund Facility and the Extended Credit Facility provided Kenya with an augmentation of about $941 million (Sh148.62 billion) to assist in partially offsetting the effect of external shocks on the balance of payment and fiscal positions.

The Treasury projects the fiscal balance at Sh785 billion down from Sh886.6 billion to be financed by Sh362 billion from net foreign financing and Sh422.7 billion from net domestic financing.

By JOHN WAWERU