Kenya debt to GDP ratio has officially crossed a 70% mark

Geza Ulole

JF-Expert Member
Oct 31, 2009
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Kenya’s debt races past Ksh.7 trillion​

By Kepha Muiruri For Citizen Digital
time updated
Published on: October 12, 2020 10:00 (EAT)

Kenya’s debt races past Ksh.7 trillion

File Photo of The National Treasury

In Summary​

  • The roughly Ksh. 1 trillion addition in the public debt registry is largely attributable to an unrestrained borrowing following the advent of COVID-19 pandemic in the country.
  • The significant accumulation of debt in Kenya has coincided with the new credit lines from Kenya’s development partners with the facilities meant to cushion the economy against the adverse effects of the pandemic.
  • According to the PBO, Kenya’s stock of debt is expected to hit Ksh.7.5 billion next year while the Ksh.9 trillion ceiling approved by Parliament last year will be surpassed at the end of the 2022/23 financial year.
Kenya’s stock of debt zoomed past the Ksh.7 trillion mark in August wounding up at Ksh.7.1 trillion from a flat Ksh.6 trillion at the start of 2020.

The roughly Ksh. 1 trillion addition in the public debt registry as revealed in the latest data from the National Treasury and the Central Bank of Kenya (CBK) is largely attributable to an unrestrained borrowing following the advent of COVID-19 pandemic in the country.

Kenya’s debt stood at a flat Ksh.6 trillion a year ago, translating into an 18.3 per cent growth in the stock of loans as of August this year.

The highest accumulation of the debt has been recorded between March and August when an estimated Ksh.800 billion was added to the stock.

The significant accumulation of debt in Kenya has coincided with the new credit lines from Kenya’s development partners with the facilities meant to cushion the economy against the adverse effects of the pandemic.

For instance, Kenya booked Ksh.81.3 billion ($749 million) from the International Monetary Fund (IMF) Rapid Credit Facility (RCF) and Ksh.108.5 billion ($1 billion) from the World Bank Development Policy Operations (DPO).

External debt has grown by 15.6 per cent to Ksh.3.7 trillion between March and August while local debt has expanded by 9.7 per cent in the same period to Ksh.3.4 trillion.

The majority of the domestic debt, 67.12 per cent is held in Treasury bonds (T-bills) with banking institutions holding a bulk 55.1 per cent of the local loans.


The expansion of Kenya’s debt stock is expected to continue piling pressure on the country’s debt sustainability which has become severed under the COVID-19 pandemic.

In its latest report, the Parliament Budget Office (PBO) has warned of increased debt pressure amidst what are low domestic revenues against increased spending needs under the global health crisis.

According to the PBO, Kenya’s stock of debt is expected to hit Ksh.7.5 billion next year while the Ksh.9 trillion ceiling approved by Parliament last year will be surpassed at the end of the 2022/23 financial year.

Kenya is already staring at a substantive debt refinancing crisis as it currently deploys 49 per cent of ordinary revenues in debt servicing.


This means for every shilling collected, 49 cents go to debt repayment while only a mere 51 cents are left behind for budget implementation.

“The 2020/21 financial year will present difficult economic conditions for fiscal consolidation measures to maintain debt at sustainable levels,” noted the PBO.

Additionally, Kenya’s domestic economy is under pressure from the pandemic while the international financial markets are at the moment non-conducive for debt refinancing.

Moreover, the Kenya shilling has marked a depreciation trend signalling higher costs of external debt refinancing which by large denominated in dollar terms.

The National Treasury is expected to borrow Ksh.951.4 billion in net terms by June according to new revisions contained in the draft Budget Review and Outlook Paper (BROP) to include Ksh.396.8 billion in external debt and Ksh.554.6 billion in local debt.

Externally, commercial financing will represent a partly Ksh.6.2 billion with semi-concessional loans representing Ksh.124.1 billion.

Project loans are estimated at Ksdh.244.1 billion while programme loans are projected at Ksh.202 billion of which Ksh.150 billion is an expected World Bank DPO loan.

Source: Citizentv.co.ke

==========

MY TAKE: One has to note that 70% ratio is based on the much debated GDP of Kenya of $100bln! If one takes a realistic figure of Kenya's GDP at $75-80 bln the debt to GDP ratio is already beyond 90% of Kenya's realistic GDP!

nomasana, sam999, NairobiWalker, hbuyosh, msemakweli, simplemind, Kimweri, Bulldog, MK254, Kafrican,Ngongo, Ab_Titchaz, mtanganyika mpya, JokaKuu, Ngongo, Askari Kanzu, Dhuks, Yule-Msee, waltham, Mzee, mombasite gabriel, Juakali1980, Boda254, mwaswast, MwendaOmo, Iconoclastes, oneflash, Kambalanick, 1 Africa, saadeque, burukenge, nyangau mkenya, Teen-Upperhill Nairobi, kadoda11
 

Naton Jr

JF-Expert Member
Oct 5, 2016
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".... This means for every shilling collected, 49 cents go to debt repayment while only a mere 51 cents are left behind for budget implementation."

Sasa kama inayobaki ni 51 na misharaha tu inakula zaidi ya 55 nini kingine kipo Kenya? Failed Kunyaland 😁
 

Hoshea

JF-Expert Member
Jan 24, 2012
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Waacheni mid income, richest country in Africa, hilo deni kwao ni kitu kidoogo.
 

Justinr

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May 22, 2020
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Mtanzania hata hafai kuongelea mambo za deni kwa sababu naezakumbu Tz is the only country in East Africa washawaishindwa kulipa deni hadi ikabidii wasamehewe.
Yani bado inaonekana hata huelewi kinacho zungumzwa, yani serikali yenu kulipa deni inabidi kusimamisha mambo yote kwa mika isiyo pungua mitano. yet you sound like Your nation can hadle it. Stop fooling yourself.
 

Teargass

JF-Expert Member
Apr 23, 2018
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Yani bado inaonekana hata huelewi kinacho zungumzwa, yani serikali yenu kulipa deni inabidi kusimamisha mambo yote kwa mika isiyo pungua mitano. yet you sound like Your nation can hadle it. Stop fooling yourself.
We can handle it that`s why we will continue borrowing. By the way mmelipa deni ya mkulima?
 

Geza Ulole

JF-Expert Member
Oct 31, 2009
34,937
2,000
Mkuu Geza ulole unalitendea haki hili jukwaa yani unawajuwa wakenya Kama sehemu ya ukoo wenu.

Ulitakiwa uwe ambassador wa Tz huko kwa wakenya maana unapiga za uso hapa jukwaani kwa facts siyo kwa kubahatisha.​
Mi nawashauri hawa majirani wachunge maana corona bado haijapata vaccination ikitokea another strike ya kuwafungia ndani tena amini usiamini Uchumi wa Kenya uta-collapse mind u 49% ya yearly Budget allocation inalipa madeni na tayari wana-default debt servicing!
 

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