This archive report was first published on 1 November 2019.
On November 1, 2019, the National Treasury building was a symbol of the country's financial struggles.
Kenya's public debt has been a growing concern, with the total debt crossing the Sh6 trillion mark in July 2019, up from Sh1.89 trillion in June 2013.
According to a report, the maturity of the Sh1.2 trillion domestic public debt over the next year offers the Treasury the best opportunity to restructure Kenya's loans and ease the mounting repayment burden.
About 43 percent of the Sh2.87 trillion public domestic debt, which is owed to local investors, will mature next September.
The Treasury has three options to consider: using taxes to repay the bulk of the maturing debt, negotiating with domestic lenders to extend the maturity of the loans, or reducing expensive local borrowing in favour of concessional loans from foreign lenders.
Reducing borrowing from capital markets and tapping cheaper longer dated foreign loans in the mid-term is the recommended option.
By doing so, the government will focus on boosting revenue collection in order to cut the need for additional borrowing.
The cost of domestic debt tends to be higher compared to foreign borrowing, with cumulative interest on domestic debt being three times higher than that of foreign debt.
Presently, more than half of taxes are committed to debt repayments after Kenya ramped up borrowing over the past five years.
