Kenya needed to pay Ksh.161 billion debt by October - CS Mbadi
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Treasury CS John Mbadi holds a meeting with representatives of various government bodies and corporate entities on January 24, 2025.
Speaking on Spice FM, Mbadi gave a breakdown of the figures, pointing out that the loan accrued due to Eurobond and syndicated loans.
He explained that Kenya will be required to pay Ksh.116 billion Eurobond by May 2027. This ought to be paid in three equal phases (Ksh.38.8 billion yearly up to 2027).
In addition, Kenya has accrued Ksh.952 million from syndicated loans that must be paid in eight months.
Eurobond and syndicated loans are referred to as commercial loans which are provided by financial institutions that are in direct contact with the debtor, which in this case is the Kenyan government.
"In September we are supposed to pay Ksh.25.8 billion to the Trade and Development Bank, another Ksh.10 billion and also Ksh.83.5 billion. Add another Ksh.3.4 billion, and that gives you Ksh.123 billion by October," he told Spice FM.
"This is besides the Eurobond (Ksh.38 billion needed in 2025). That is the kind of pressure we're in."
He pointed out that Kenya's domestic and foreign debt has a near 50:50 ratio; a policy that the Kenyan government seeks to maintain to avoid exposing taxpayers to fluctuation in interest rates.
"(Domestic borrowing) is almost balancing 50/50. Right now, we have almost Ksh.5.6 trillion in domestic borrowing and about Ksh.5.1 trillion in foreign debt," he pointed out.
Resolving Kenya's looming debt crisis has been a conundrum for previous and current administrations, affecting the country's economic growth and stability.
Kenya is currently involved in three types of debt; multilateral, bilateral and commercial.
Multilateral debt involves global financial institutions such as the World Bank, International Monetary Fund (IMF) and African Development Bank Group. This type of debt is regarded as affordable for countries in debt distress.
Bilateral involves transactions between a country and other sovereign nations while commercial debt (Eurobond, syndicated loan) is provided by lenders such as banks on commercial terms.
Interest rates for commercial debt are often high hence piling pressure on the countries to repay the loans to avoid defaulting.
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