This archive report was first published on 31 October 2019.
Kenya's public debt has reached alarming levels, with the government facing a daunting task of raising Sh1.2 trillion in the next 11 months to settle almost half of the public domestic debt.
According to the World Bank, 43% of the Sh2.87 trillion debt will mature in September next year, with the debt owed to local investors.
The Kenya Revenue Authority (KRA) has been working tirelessly to collect more revenue, collecting Sh1.496 trillion in the year ending June, but the public debt would still account for 82.3% of that amount.
The World Bank has warned that negotiating with investors and lenders will hold high risks, citing the challenges of rolling over bonds in an environment of no interest rate caps, low subscription rates, and overexposure of commercial banks to these assets.
“The government could face challenges in rolling over such bonds in an environment of no interest rate caps, low subscription rates and overexposure of commercial banks to these assets,” the World Bank cautioned in its latest update on the Kenyan economy.
“Debt service obligations will continue to impose significant fiscal strain on the Exchequer. Kenya could face fiscal pressure in meeting its near-term debt and repayments obligations,” the World Bank added.
Kenya's public debt crossed the Sh6 trillion mark in July, up from Sh1.89 trillion in June 2013, with MPs recently voting to amend the law that restricts public debt at half of the gross domestic product, a move that will see public debt rise to Sh9.1 trillion.
