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BY MOSES OGADA AND
JACKTONE LAWI
The National Treasury has laid bare the pain
awaiting Kenyans in repaying loans borrowed from external lenders and
domestically.
Fresh data tabled in Parliament reveals that
taxpayers would dig deeper in their pockets in the next three fiscal years to
repay the mounting state obligations.
Details show that for every Sh100 the government
collects, Sh68 goes to servicing the Sh10.6 trillion debts as of June 30, 2024.
Treasury revealed that the country’s debt stock
increased by Sh303 billion compared with June 2023, with the stock
projected to hit Sh13 trillion in year ending June 2028.
It said the service costs went up from 58 per
cent last year after the government paid Sh259 billion Eurobond.
It has also emerged that taxpayers forked about
Sh1.6 billion as commitment fees for loans it had borrowed yet was not ready to
use.
Last year, taxpayers paid about Sh1.4 billion
for loans taken but not disbursed to the respective agencies that should
utilise the borrowings.
Despite the assurances by Treasury that the debt
situation would improve, the 2024 public debt report shows it would cost as
much as Sh2.3 trillion to service debt.
Interest payments alone are projected to cost
well above Sh1 trillion in the next three financial years.
“Over the medium term, domestic interest
payments as a share of GDP (Sh16 trillion) is projected to remain above three
per cent, while external interest payments are projected at about one per
cent,” the report reads.
“In nominal terms, total interest payment is
projected to increase to Sh1.079 trillion in the financial year 2027-28 from
Sh840 billion in the FY 2023-24, majorly driven by domestic interest payments.”
The projected increase in repayments compounds
the problem posed by the recent downgrade by credit firms.
The country is staring at a fundraising
nightmare from the international markets after global credit ratings agency
Fitch downgraded Kenya's sovereign rating to "B-" from "B".
Moodys had also moved from B3 rating,
whereby the country's debt obligations are speculative and subject to high
credit risk, to Caa1 rating, whereby the obligations are poor and subject to
'very high credit risk'.
Moody's attributed the downgrade to Kenya's
inability to effect fiscal consolidation measures that would lower the risk of
defaulting.
The downgrades put Kenya at a heightened risk of
losing the attractiveness of the international lenders after the government
backtracked on key revenue measures following protests.
According to the report, World Bank remains the
country’s top lender, with fresh National Treasury details showing its size of
Kenya’s debt has expanded to about Sh1.6 trillion.
Fresh Treasury data shows that World Bank’s
share accounted for 30 per cent, while International Sovereign Bond (ISB)
holders and China were among the major external creditors.
Sovereign bond holders accounted for Sh854
billion of the external public debt stock, whereas China’s lending stood at
Sh737 billion as of June 30, 2024.
The details could shed light on how Kenya has
been attracting more billions from the West since President William Ruto
assumed office.
The data shows that taxpayers owed Africa
Development Bank Sh508 billion and Sh421 billion to the International Monetary
Fund (IMF).
Japan and France emerged as the bilateral
lenders with high amounts at Sh142 billion and Sh96 billion respectively as
of June 30, 2024.
The United States, which President Ruto has
toured more than four times since taking over, has lent Kenya Sh40 billion.
Treasury stated that Italy, which is also
pursuing dam contracts in the country, lent the country Sh32 billion.
Locally, commercial banks are owed the highest
amount at Sh2.36 trillion, followed by trust and pension funds at Sh1.55
trillion out of the Sh5.4 trillion.
The government had borrowed Sh170 billion from
Central Bank of Kenya, Sh379 billion from insurance companies, and Sh943
billion from ‘other investors’.
The report signed by Treasury CS John Mbadi
states that the share of debt to the country’s wealth would decline.
