This archive report was first published on 29 June 2021.
On June 10, 2021, National Treasury and Planning CS Ukur Yattani presented the Financial Year 2021/2022 budget at Parliament Buildings in Nairobi.
Kenya is set to abandon its current Sh9 trillion debt ceiling and revert to a rule pegged on the country's gross domestic product (GDP), according to the International Monetary Fund (IMF). The IMF made this revelation in its first review of the extended arrangement under the Extended Fund Facility and Extended Credit Facility, a Sh256 billion credit facility programme.
The IMF stated that Kenyan authorities have proposed an amendment to the Public Finance Management Regulations to replace the current nominal legal ceiling on debt issuance, which is capped at Sh9 trillion. Instead, they want to replace it with a medium-term debt-to-GDP anchor of 55 per cent of GDP in present value terms, discounting for low interest.
“Staff welcomes the new anchor and introduction of an accountability requirement — whereby the government explains to Parliament how planned policies would bring the debt ratio from current to targeted levels,” said the IMF.
Kenya's debt as at the end of March stood at Sh7.3 trillion. With the country expected to borrow about Sh1 trillion in the financial year 2021/22, the Sh9 trillion ceiling will be surpassed.
