Kenya’s debt to hit Ksh.10.4T by June 2024
Kenya’s debt is expected to sky rocket to Ksh.10.4 trillion by the end of June in 2024 from the present stock of Ksh.7.1 trillion according to a just released report.
The 2019/20 Public Debt Management Report by the National Treasury tabled in Parliament earlier this month reveals elevated debt risks over the medium term along with a significant rise of debt servicing costs.
The higher debt stock will set against the recently revised public debt ceiling of Ksh.9 trillion by the National Assembly with the limit being surpassed long before June 2023 when the stock of debt is projected to stand at Ksh.9.4 trillion.
The National Treasury has nevertheless insisted of the sustainability of the country’s debt as it faults the combination of underlying weaknesses and the global COVID-19 crisis for the expected astronomical rise in the stock of debt.
“Kenya’s debt remain sustainable. The risk of external debt distress has moved from high to moderate due to the impact of the global COVID-19 crisis which worsened existing vulnerabilities,” the National Treasury noted in the report.
“Addressing the crisis has required a strong fiscal response from the government which will lead to increased budget deficits. Consequently a number of debt indicators will worsen.
Kenya has been on a borrowing spree since the start of the pandemic, immersing debt worth Ksh.1 trillion in eight months to August to lift the public debt stock from a flat Ksh.6 trillion at the end of 2019.
The unchecked borrowing has been occasioned by falling government revenues which came under pressure from restrictions which curbed enterprise activity from the beginning of April.
While Kenya’s debt may remain sustainable, the growing stock of debt is expected to exert pressure on the country’s budget as debt repayments eat into revenues collected.
According to the debt service projection, Kenya will require Ksh.1.1 trillion to pay debts in the 2023/24 financial year from the current Ksh.642.7 billion in the year to June 2021 or an equivalent 36.1 per cent of revenues.
Comparatively, Kenya will be deploying 51 cents to pay debt from every shilling of revenue collected from a current low of 36 cents.
The higher debt service spend will leave little in allocations to crucial government development initiatives.
The worse off debt projection comes as civil society groups accuse the National Treasury and the National Assembly of complacency in the management of public debt.
The National Assembly has previously been accused of kicking the can down the road as it passes the baton of debt responsibility to future governments by extending the debt ceiling to Ksh.9 trillion in 2019.