Treasury CS John Mbadi speaks during Bunge la Mwananchi forum in Nairobi, Monday, February 3, 2025.
National Treasury CS John Mbadi has acknowledged that the country is not doing well but it's making strides in the right direction toward economic recovery.
Speaking on Monday during an engagement with Kenyans at a Bunge la Mwananchi forum in Nairobi, the CS said the postive economic outlook was recently affirmed by credit rating agency Moody's, which said Kenya's debt repayment capability had improved.
"Are we doing okay? The answer is no, we are not doing okay but we are better than yesterday. Why do I say we are better than yesterday? There's this rating that has come out from the Moody's, some people think ni mushene (gossip), this is not mushene, this is factual," he said.
"The credit rating is all about a country's ability to repay its debt and that can only be assessed from certain parameters."
Mbadi said among the parameters that indicate the economy is on a recovery trajectory is falling inflation from 9.6 per cent in October 2022 to the current 3.3 per cent.
The CS said the second indicator of an improving economy is the interest rate at which a government borrows.
"When I took over office, we were borrowing at 15.6 per cent through the 91-day treasury bills, today as we speak that has come down to 9.5 per cent, single digit for the first time," Mbadi said.
That has givenm indicator that we can be able to borrow money cheaply to retire expensive loans. If we are borrowing cheaply to repay expensive laons, that's the only way you can get out of the debt trap," Mbadi explained.
A recent Moody's credit rating for Kenya was last set at Caa1 with positive outlook, meaning sovereign wealth funds, pension funds and other investors no longer view Kenya as a risky borrower, thus having a big impact on the country's borrowing costs.
Mbadi said Kenya is doing well as far as repaying her debts is concerned even though the current government came into power with a budget defict of Sh925 billion.
"This government took over when already the government was showing signs of defaulting in paying Euro bond which almost cause economic meltdown. The shilling traded 160 per dollar because of the signal was sent to the economy that the government was going to default," Mbadi said.
The CS said Kenya will only have a breathing space regarding debt repayment between 2034 and 2048, when most of her debts will have been serviced.
"In 2027, there's going to be a Euro bond of Sh900 million to be paid. May 22 is the deadline."
Mbadi said nine months later in February 2028, Kenya will have to pay another Sh1 billion followed by another in 2029 worth Sh1.2 billion; 2031 (Sh1.5bn); and Sh1.2bn in 2024.
"So the only time that we don't have Euro bond to repay is between 2034 and 2048," Mbadi said, adding that the country cannot risk delaying debt payment as it would slump back to debt to credit depression.
