Statistics from the National Treasury indicates that as of the end of last month, Kenya’s total public debt was at 5.95 trillion shillings.
International lenders dominate Kenya’s debt book with 3 trillion shillings while domestic borrowing accounts for 2.9 trillion shillings.
The issue of debt in Kenya remains a thorny issue dividing both private and public analysts. Though the government maintains that the debt to GDP ratios in healthy, analysts warn the country could be hurtling towards a very strenuous period of debt repayment especially if the global economy enters into recession.
The world’s two largest economies namely, United States and China are locked in a fierce trade war that now threatens their economic growth, fueling fears of a major world recession.
If the world’s biggest economies enter into contracted growth, Kenya will fill the pinch since US is Kenya’s largest export market, while China is the country’s biggest trading partner. Official statistics indicates that Kenya’s debt is likely to hit the 6 trillion shillings’ mark by the end of 2019.
This will exert pressure on the country’s fiscal space since the country is spending close to half of its revenue on debt repayment.
Data from the National Treasury shows that Kenya’s debt swelled in the month of May when the country borrowed 210 billion shillings through a third Eurobond.
Domestically treasury bonds continue to attract the most interest followed by treasury bills. This is exerting pressure on private sector credit that continues to suffer due to the interest rate cap.
Banks remain the biggest lender to the government followed by pension funds.
In July, the National Treasury set up the debt management office to put checks and balances on government’s borrowing plans and trends.