Kenya’s public debt is expected to hit Sh7 trillion by 2022 according to Annual Public Debt Management Report by National Treasury Cabinet Secretary Henry Rotich.
That is the same time President Uhuru Kenyatta will leave office marking the end of his second term.
The report shows that national debt as at June this year – both domestic and foreign – stood at Sh5.1 trillion. Domestic debt stands at Sh2.5 trillion while foreign debt has hit Sh2.6 trillion.
By June next year (2019) the report suggests the country’s debt burden will hit Sh5.6 trillion.
Domestic and external debt accounted for 49.1 per cent and 50.9 per cent of total public debt respectively at end of June 2018 compared to 47.9 percent and 52.1 percent for June 2017 respectively according to the report.
The country has received Sh559.1 billion from China, Sh101.9 billion from Italy and Sh34.7 billion from Germany. Other creditors are Belgium who gave Sh10.2 billion and the US (Sh2.9 billion).
International Development Association (IDA) has also contributed to the debt burden by loaning the country Sh516.8 billion; African Development Bank (AfDB) has extended a Sh204.8 billion facility while International Monetary Fund (IMF) has given a Sh71.6 billion loan.
Kenya’s Gross Domestic Product (GDP) expanded by 4.9 per cent in 2017 compared to 5.9 percent in 2016 the report suggests
But with concerns of the country’s debt sustainability, CS Rotich has maintained that the country is not badly off as gross domestic product expanded by 4.9 per cent in 2017 compared to 5.9 per cent in 2016.
He says the economy has remained “resilient despite multiple shocks arising from the prolonged drought, electioneering period and global economic slowdown”.
“Growth was mainly attributed to improved weather conditions, stable business environment and consumer confidence,” he explains.
The debt burden and dwindling revenue streams have put pressure on major capital projects as the Government struggles to source funds through new tax measures that have hit Kenyans hard.
The President last month cited a Sh67.5 billion funding gap for his decision to reject the Finance Bill 2018.
Uhuru said the revenue shortfall would cause major paralysis in Government operations and returned most of the tax measures that were rejected by the MPs.
The report indicates domestic debt increased from Sh2.1 trillion in 2017 to Sh2.5 trillion in June 2018, representing 49.1 per cent of the country’s debt.
External debt, which includes guaranteed debt, increased by 12 per cent from Sh2.3 trillion in June last year to Sh2.6 trillion in June this year, representing 50.9 per cent of the total debt.
According to Treasury, the increase was as a result of a Sh200 billion International Sovereign Bond.
The money was borrowed in the last financial year to finance major infrastructure projects, but has remained controversial after the Government failed to explain how it was spent.
The CS has indicated his ministry is implementing financial consolidation to strike a balance between revenue and expenditures.