Kenya’s public debt surges 12,000pc in last two decades
Zachary Ochuodho @zachuodho
Kenya’s gross public debt has surged by a whooping 11,944.6 per cent over the last two decades having risen from Sh502.3 billion in December 1999 to the current Sh6.05 trillion.
This is on the back of increasing appetite for mega projects including infrastructure development, dams, energy and health.
Last year alone the government borrowed Sh776.4 billion pushing the public debt to Sh6.05 trillion compared to Sh5.3 trillion registered at the end of December 2018. Kenya’s net public debt stood at Sh5.52 trillion by the end of 2019.
Debt payments
By the end of December 2019, the total cumulative debt service payments to external creditors amounted to Sh105.4 billion. This comprised Sh43.9 billion (41.6 per cent) principal and Sh61.5 billion (58.4 per cent) interest.
Out of the Sh6.05 billion gross public debt, 51 per cent was external debt, while 48.6 per cent was borrowed internally.
The increment in public debt is attributable to external loan disbursements and the uptake of domestic debt.
Currently, Kenya’s 37 per cent of public debt is commercial, 29 per cent bilateral 29 per cent and 14 per cent multilateral. In the domestic market, the debt is composed of overdrafts, loan from commercial banks, non-banks and non-residents.
Institute of Certified Public Accountants of Kenya (ICPAK) chairman, Rose Mwaura, argued that debt is not bad.
However, it becomes bad only if it is used for a purpose different from that which it was meant for.
She said fiscal deficit (including grants) is projected at Sh569.4 billion (4.9 per cent of gross domestic product) in the 2020/21 financial year which will be financed by net external financing of Sh247.3 billion (2.1 per cent of GDP) and net domestic borrowing of Sh318.9 billion (2.7 per cent of GDP) and other net domestic receipts of Sh3.2 billion.
Mwaura advised Treasury to re-negotiate debt repayment by stretching the debt tenure quantum.
She said the bulk of Kenya’s external public debt carries concessional terms with recent commercial borrowing entailing significant repayment needs in 2019 and 2024.
