Kenya debt to GDP ratio has officially crossed a 90% mark

[Magonjwa Mtambuka]

There goes the ndanganyi-ass national anthem song, nyangau,beberu. Soo engrained tendency

Go hang!

 

[nomasana]

Go hang!

aaaww, someone is a lil emotional

 

[Geza Ulole]

Economics

Kenya to Borrow $12.4 Billion Abroad by June 2022, IMF Says​

By
David Herbling
7. April 2021, 12:18 MESZ Updated on 7. April 2021, 15:27 MESZ

• Seeks $7.3 million Eurobonds, $4.8 billion concessional debt
• Kenya is at high risk of debt distress, according to IMF

​

Kenya plans to borrow $12.4 billion between now and June 2022 from foreign sources, the International Monetary Fund said in a report detailing terms and conditions of a separate $2.34 billion financing package approved by its board last week.


The amount includes $7.3 billion in Eurobonds, $4.8 billion in concessionary borrowing and $282 million semi-concessional loans, the IMF said in a report on its website. About $2.3 billion of the Eurobonds will be new borrowing to be spent on infrastructure projects, while $5 billion is refinancing for a Eurobond maturing in 2024 and to retire pricey syndicated loans, it said.


The external borrowing during the next 14 months amounts to about 6% to 7% of gross domestic product, according to Yvonne Mhango, head of research for sub-Saharan Africa at Renaissance Capital.


“It’s a significant amount for a country with debt that is already close to 70% of GDP, and one that is at high risk of debt distress,” she said. “The increase in domestic yields may be a factor that compelled the authorities to seek some external financing. However, we expected an increase in concessional financing to help keep financing costs moderate.”

​

Key Highlights:​

• “While Kenya is at high risk of debt distress and subject to zero limits on non-concessional borrowing, the authorities have requested, and staff supports, non-zero limit exceptions for project financing and debt-management operations,” according to the IMF report.
• Some of the reforms Kenya will implement during the 38-month IMF program include broadening the tax base to grow revenue and freezing civil-service recruitment.
• Treasury also agreed to evaluate fiscal risks posed by about 20 large state-owned enterprises including Kenya Airways Plc, Kenya Railways Corp., Kenya Power and Lighting Co., Kenya Electricity Generating Co. The state will seek an independent adviser to evaluate the financial situation of its national airline and the least costly restructuring options for the company.
• By October 2022, Kenya would have expanded reporting on public debt to cover non-guaranteed public-sector debt, including arrears.
• It also plans to adopt e-procurement for transparency, strengthen its anti-money laundering measures, and make it mandatory for companies to declare their ownership to support anti-corruption efforts.
• Treasury also plans to review the legal debt ceiling in the coming fiscal year to ensure it “remains consistent with program targets.”
• Ghana’s successful issuance last week signals there’s still strong appetite for high-yield sovereign credit and Kenya will likely draw interest despite deteriorating public finances, according to Irmgard Erasmus, a senior financial economist at NKC African Economics.
• Kenya’s outstanding dollar bonds don’t offer much value, according to Erasmus, “but the global backdrop should be favorable for high-yield frontier market issuers especially non-fuel commodity exporters. Kenya is trading expensive but yield-seeking may stoke appetite for new issuance still, especially with the U.S. Fed maintaining highly accommodative stance with rate lift-off seen in mid-2023 only.”
• Yields on Kenyan Eurobonds due in 2024 fell 8 basis points to 3.493% by 4:25 p.m. in Nairobi, the capital, the most in almost a month.

(Updates with bond yields in final bullet)

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VS​

Economics

East Africa Seeks $16 Billion of Debt to Spur Economies​

By
David Herbling
10. Juni 2021, 05:00 MESZ Updated on 10. Juni 2021, 19:05 MESZ

• States see strong recovery after pandemic hit revenues
• Kenya, Uganda and Tanzania budgets to be presented on June 10

The countries are betting on a strong economic recovery for a rebound in revenues that will help narrow fiscal deficits.
Photographer: Fredrik Lerneryd/Bloomberg

​

East Africa’s largest economies plan to borrow at least $16 billion to fund an economic revival, while striving to ease their debt burdens after the coronavirus pandemic battered governments’ revenue.



Finance ministers in Kenya, Uganda and Tanzania will present their 2021-22 spending plans on Thursday, providing details on funding key projects, including building railways and ports, in the wake of heavy indebtedness. The three governments will contend with a combined budget shortfall of about $16.4 billion in the fiscal year. Kenya, East Africa’s largest economy, faces a gap of $8.8 billion equivalent to 7.7% of gross domestic product, which it plans to fill with external and domestic borrowing.


“Policy makers will this year need to lay bare their fiscal consolidation plans and address the elevated debt burdens,” Jacques Nel, head of Africa Macro at NKC African Economics, said in emailed responses to questions. “Developmental needs and projects already underway mean that there is little room to cut spending.”

Budget Gap​

East Africa's biggest economies plan to cut their fiscal deficits

Source: Finance ministries of respective countries

Note: Chart shows government estimates for 2021 and 2022

The countries are betting on a strong economic recovery for a rebound in revenues that will help narrow fiscal deficits. The International Monetary Fund projects 2022 growth of 5.7% for Kenya, 5% for Uganda, 4.6% for Tanzania and 8.7% for Ethiopia.

Here’s what to expect when the finance ministers present their budget statements for the year starting July 1:

​

Kenya​

President Uhuru Kenyatta’s administration is poised to borrow more to fund an 8.8% increase in spending to 3.66 trillion shillings ($33.9 billion). The added expenditure is fueled by Kenyatta’s need to continue investing in expressways, ports and railways as he nears the end of his second term in office next year.
Treasury Secretary Ukur Yatani asked lawmakers on Wednesday to approve a 4% increase in spending for year ending June 30, which is set to widen the budget gap.

​

Debt Burden​

Kenya's debt-servicing cost is projected to grow 22% in 2022

Source: National Treasury
Note: Chart shows data for fiscal years ending June 30

The public debt-service costs will probably surge to a record 1.17 trillion shillings, consuming about two-thirds of domestic revenue, according to the parliamentary budget office. That exceeds the 660 billion shillings that Yatani proposes to spend on development projects.

more: Kenya 2021-22 Budget Gap Seen Narrowing to 7.7% of GDP vs 8.7%

​

Tanzania​

The government has increased its budget by 4% to 36.3 trillion shillings ($15.7 billion) in Samia Suluhu Hassan’s first fiscal year as president. She has approached the IMF for a program to support her administration in mitigating the impact of the pandemic, and to implement a recovery plan.

Tanzania plans to borrow close to 10.2 trillion shillings, about half of which will come from external sources.

Hassan is preparing to procure vaccines for her people, begin delayed investments such as the $30 billion liquefied natural gas project led by Equinor ASA, and continue multi-billion programs including an oil-export pipeline with Uganda. Still, the government is optimistic of keeping its fiscal deficit below 3% of GDP.

Uganda​

Uganda has reduced its planned expenditure by 2% to 44.7 trillion shillings ($12.6 billion), and intends to narrow the fiscal deficit to 6.4% of GDP from an estimated 9.7% in the year ending June 30. The government of Africa’s largest coffee exporter is in talks with the IMF for a $1 billion loan to boost its recovery plan.

Ballooning Debt​

Borrowing for key infrastructure projects is driving up Ugandan debt

Source: Ministry of Finance, Planning and Economic Development
Note: Chart shows data for fiscal years ending June 30

Debt could approach 50% of GDP at the end of June, according to Moody’s Investors Service. “Persistently large fiscal deficits” lifted the government’s debt burden to about 40% of GDP in fiscal 2020 from 22% in 2013, Moody’s said in a statement.

​

Ethiopia​

Planned expenditure for Africa’s second-most populous nation will grow by nearly a fifth to 561.7 billion birr ($13 billion) for the fiscal year starting July 8. The government is walking a tight rope between sustaining the fastest pace of economic growth in the region, and keeping a lid on debt.

Prime Minister Abiy Ahmed’s administration sold a telecommunications license to a Safaricom Plc-led consortium last month under a plan to liberalize the economy. Doing business in the country might, however, depend on the impact of U.S. sanctions against Ethiopia over its handling of the war in the northern Tigray region. The restrictions could also affect Ethiopia’s access to funding from the IMF and the World Bank, and probably complicate its intention to restructure some liabilities under the Group of 20 debt-relief initiative for poor nations.

​

Rwanda​

The government has raised its annual budget by 10% to 3.81 trillion francs ($3.8 billion), and is also in talks with the IMF for a funding program. About a third of the budget will be funded from external sources.

The IMF concluded discussions with Rwanda on the fourth review of an ongoing Policy Coordination Instrument last month. The Fund projected Rwanda’s economy to grow at 5.1% this year, compared to a contraction of 3.4% in 2020.
“Most countries don’t have an option but to seek concessional borrowing in order to plug funding gaps,” said Mohamed Abu Basha, head of macroeconomic analysis at EFG Hermes Holdings. “In the short term, it will be all about stabilization.”

— With assistance by Fred Ojambo, Fumbuka Ng'Wanakilala, Saul Butera, Desire Nimubona, Fasika Tadesse, Okech Francis, and Prinesha Naidoo
(An earlier version of this story was corrected to remove reference to funding in penultimate paragraph)

Bloomberg - Are you a robot?

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[Geza Ulole]

 

[Magonjwa Mtambuka]

aaaww, someone is a lil emotional

How?

 

[Geza Ulole]

 

[Geza Ulole]

 

[Geza Ulole]

 

[Geza Ulole]

IMF to give Kenya additional $407m budgetary support​

THURSDAY JUNE 24 2021​

IMF executive board approves the release of an additional $407 million budgetary support for Kenya. PHOTO | FILE | NMG

​

Summary​

• In April this year IMF Board approved a $2.34 billion three-year financing package for Kenya to support the government’s next phase of the Covid-19 response, enhance governance and reduce debt vulnerabilities while safeguarding resources to protect vulnerable groups.

By JAMES ANYANZWA
More by this Author

The International Monetary Fund (IMF) executive board has approved the release of an additional $407 million budgetary support for Kenya after being satisfied with the government’s commitment to socio-economic and structural reforms under its 38-month financing programme with the East African nation.

In a statement Wednesday the Fund said the Board’s decision allows for an aggregate immediate disbursement of $407 million, bringing Kenya’s total disbursements for budget support under the under the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF) programme to about $714.5 million.

In April this year IMF Board approved a $2.34 billion three-year financing package for Kenya to support the government’s next phase of the Covid-19 response, enhance governance and reduce debt vulnerabilities while safeguarding resources to protect vulnerable groups.

As part of the review, the board was satisfied that Kenyan authorities are showing strong commitment to their reform agenda in challenging circumstances and are acting to reduce debt vulnerabilities while maintaining support for the economic recovery.

“The Kenyan authorities continue to demonstrate strong commitment to their fiscal reform agenda during this unprecedented global shock. Performance under the EFF/ECF arrangements has been broadly satisfactory despite a challenging environment,” said Antoinette Sayeh, IMF’s Deputy Managing Director and Acting Chair of the Executive Board.

“Maintaining momentum on the structural reform agenda is important. The very substantial progress made in assessing the financial situations of state-owned enterprises (SOEs) that pose the largest fiscal risks provides a solid basis for identifying least-cost approaches to address their financial challenges, and should be complemented with efforts to improve oversight and management of SOEs more broadly,” added Ms Sayeh.

According to IMF Kenya’s debt indicators, such as debt service as a share of exports and revenues, have worsened due to the Covid-19 shock, and fiscal adjustment under the new three-year programme are expected to reduce debt-related risks and put debt as a share of GDP firmly on a declining path by the end of the arrangements.

Kenya was hit hard at the onset by the Covid-19 pandemic, with the economy contracting to 0.1 percent in 2020 from 5.4 percent in 2019.

According to the IMF, Kenya’s debt remains sustainable but it is at high risk of debt distress.

In May last year the Fund approved the disbursement of $739 million to be drawn under the Rapid Credit Facility (RCF) to support the government’s response to the Covid-19 pandemic.

IMF to give Kenya additional $407m budgetary support

The board was satisfied that Kenyan authorities are showing strong commitment to their reform agenda.

www.theeastafrican.co.ke

 

[Geza Ulole]

World Bank debt rises in Uhuru’s last days as China loans drop​

MONDAY FEBRUARY 21 2022

President Uhuru Kenyatta with World Bank Country Director for Kenya Keith Hansen. PHOTO | PSCU

World Bank and the International Monetary Fund (IMF) have stepped up lending to Kenya over the past three years, which has seen Chinese loan deals reduce, firming the grip of Bretton Woods institutions on East Africa's biggest economy.

Data from the National Treasury show World Bank's total lending rose by Sh517 billion from June 2019 to Sh1.125 trillion in December, with the bulk loans coming in the wake of Covid-19 economic hardships.

The IMF lending grew from Sh158.5 billion to Sh207.5 billion in the same period while Chinese loans increased by Sh125 billion to Sh786 billion.

This is a departure from lending trends in the first term of President Uhuru Kenyatta's reign when Nairobi was a major beneficiary of China's loans for the development of mega infrastructure projects such as roads and a modern railway over the last decade.

Beijing became the largest bilateral creditor after its loans to Kenya grew from Sh63 billion to Sh478 billion in President Kenyatta’s first term.

In the first term that ended in August 2017, the IMF loans to Kenya grew from Sh73.7 billion to Sh77.6 billion, while those from the World Bank increased by Sh208 billion.

The accumulation of Chinese debt has caused anxiety among analysts and activists in recent years as the loans increased to hundreds of billions of shillings in just a few years while its repayment terms are not made public.

The most notable project funded by the Chinese is the standard gauge railway (SGR), whose commercial viability has been the subject of intense scrutiny.

But for nearly four years now, Kenya has abandoned expensive commercial debt to cut back on ballooning repayments while the Covid-19 pandemic squeezed revenue collection.

As part of that strategy, it has secured hundreds of billions from the IMF and World Bank, a key plank being direct lending for the budget to top up the public purse for items like paying civil servants salaries.

Under the administration of former President Mwai Kibaki, Kenya kept away from this type of credit, with most of the support from institutions like the IMF and the World Bank coming in the form of project support.

The shift followed a deteriorating cash flow situation, marked by falling revenues, worsening debt service obligations, and the effects of the Covid-19 pandemic.

The World Bank loans are now more than all of Kenya’s bilateral loans combined, which stand at Sh1.09 trillion from countries like China, Belgium, the US, France, Japan, Germany, Austria, Spain, Italy, Finland and Denmark.

This has offered the World Bank and IMF influence on Kenya’s economic policy planning that would require the government to implement tough conditions across many sectors, including a freeze in civil servants' pay and the imposition of new taxes.

Typically, World Bank loans have zero or very low-interest rates and have repayment periods of 25 to 40 years, with a five- or 10-year grace period.

President Kenyatta, who took the helm in 2013, has overseen a jump in public borrowing.

Total debt stands at 70 percent of gross domestic product (GDP), up from about 45 percent when he took over -- a surge that some politicians and economists say is saddling future generations with too much debt.

The government has defended the increased borrowing, saying the country must invest in its infrastructure, including roads and railways.

The shifting lending trends emerged as China signalled a reduction in loans to Kenya and other African countries in coming years after it cut financial commitment to projects in the continent as much as a third in the next three years.

President Xi Jinping, in December, at the Forum on China-Africa Cooperation (FOCAC), pledged to invest $40 billion (Sh4.54 trillion) in African countries for three years.

That represents a 33.33 percent drop from the $60 billion (Sh6.81 trillion) the world’s second-largest economy has committed to African countries in the last two FOCAC summits, which take place every three years.

Lower funding to Africa, research economists say, could be a pointer that Beijing is starting to see signs of reduced benefits from the cash it commits to the continent.

China’s influence on Kenya’s mega projects development started gathering steam with the construction of the Thika Superhighway between January 2009 and November 2012 for nearly Sh32 billion in the last term of President Kibaki.

China Road and Bridge Corporation, a subsidiary of China Communications Construction Company, has since bagged the lion’s share of Kenya’s mega projects — at least two railways, two ports and road projects.

The plan to cut cash flows — which largely come in form of credit lines, investment and trade finance — comes in the wake of rising indebtedness by African countries, worsened by economic fallout emerging from the pandemic.

Countries such as Zambia have struggled to service external debt in recent years and became the first one to default on Eurobond while Ethiopia’s risk of default has heightened on the back of unfolding civil war which has hurt economic prospects.

Kenya, on the other hand, was forced to drop a bid to extend debt relief with Beijing beyond June after Chinese lenders, especially Exim Bank, opposed the deal reached by the world’s richest countries under the Debt Service Suspension Initiative framework.

This followed a stand-off that had seen Chinese financiers delay disbursements, resulting in a cash crunch for Chinese-funded projects in June.

dguguyu@ke.nationmedia.com

World Bank debt rises in Uhuru’s last days as China loans drop

World Bank and the International Monetary Fund (IMF) have stepped up lending to Kenya over the past three years, which has seen Chinese loan deals reduce.

www.businessdailyafrica.com

 

[Tony254]

World Bank debt rises in Uhuru’s last days as China loans drop​

MONDAY FEBRUARY 21 2022

President Uhuru Kenyatta with World Bank Country Director for Kenya Keith Hansen. PHOTO | PSCU

World Bank and the International Monetary Fund (IMF) have stepped up lending to Kenya over the past three years, which has seen Chinese loan deals reduce, firming the grip of Bretton Woods institutions on East Africa's biggest economy.

Data from the National Treasury show World Bank's total lending rose by Sh517 billion from June 2019 to Sh1.125 trillion in December, with the bulk loans coming in the wake of Covid-19 economic hardships.

The IMF lending grew from Sh158.5 billion to Sh207.5 billion in the same period while Chinese loans increased by Sh125 billion to Sh786 billion.

This is a departure from lending trends in the first term of President Uhuru Kenyatta's reign when Nairobi was a major beneficiary of China's loans for the development of mega infrastructure projects such as roads and a modern railway over the last decade.

Beijing became the largest bilateral creditor after its loans to Kenya grew from Sh63 billion to Sh478 billion in President Kenyatta’s first term.

In the first term that ended in August 2017, the IMF loans to Kenya grew from Sh73.7 billion to Sh77.6 billion, while those from the World Bank increased by Sh208 billion.

The accumulation of Chinese debt has caused anxiety among analysts and activists in recent years as the loans increased to hundreds of billions of shillings in just a few years while its repayment terms are not made public.

The most notable project funded by the Chinese is the standard gauge railway (SGR), whose commercial viability has been the subject of intense scrutiny.

But for nearly four years now, Kenya has abandoned expensive commercial debt to cut back on ballooning repayments while the Covid-19 pandemic squeezed revenue collection.

As part of that strategy, it has secured hundreds of billions from the IMF and World Bank, a key plank being direct lending for the budget to top up the public purse for items like paying civil servants salaries.

Under the administration of former President Mwai Kibaki, Kenya kept away from this type of credit, with most of the support from institutions like the IMF and the World Bank coming in the form of project support.

The shift followed a deteriorating cash flow situation, marked by falling revenues, worsening debt service obligations, and the effects of the Covid-19 pandemic.

The World Bank loans are now more than all of Kenya’s bilateral loans combined, which stand at Sh1.09 trillion from countries like China, Belgium, the US, France, Japan, Germany, Austria, Spain, Italy, Finland and Denmark.

This has offered the World Bank and IMF influence on Kenya’s economic policy planning that would require the government to implement tough conditions across many sectors, including a freeze in civil servants' pay and the imposition of new taxes.

Typically, World Bank loans have zero or very low-interest rates and have repayment periods of 25 to 40 years, with a five- or 10-year grace period.

President Kenyatta, who took the helm in 2013, has overseen a jump in public borrowing.

Total debt stands at 70 percent of gross domestic product (GDP), up from about 45 percent when he took over -- a surge that some politicians and economists say is saddling future generations with too much debt.

The government has defended the increased borrowing, saying the country must invest in its infrastructure, including roads and railways.

The shifting lending trends emerged as China signalled a reduction in loans to Kenya and other African countries in coming years after it cut financial commitment to projects in the continent as much as a third in the next three years.

President Xi Jinping, in December, at the Forum on China-Africa Cooperation (FOCAC), pledged to invest $40 billion (Sh4.54 trillion) in African countries for three years.

That represents a 33.33 percent drop from the $60 billion (Sh6.81 trillion) the world’s second-largest economy has committed to African countries in the last two FOCAC summits, which take place every three years.

Lower funding to Africa, research economists say, could be a pointer that Beijing is starting to see signs of reduced benefits from the cash it commits to the continent.

China’s influence on Kenya’s mega projects development started gathering steam with the construction of the Thika Superhighway between January 2009 and November 2012 for nearly Sh32 billion in the last term of President Kibaki.

China Road and Bridge Corporation, a subsidiary of China Communications Construction Company, has since bagged the lion’s share of Kenya’s mega projects — at least two railways, two ports and road projects.

The plan to cut cash flows — which largely come in form of credit lines, investment and trade finance — comes in the wake of rising indebtedness by African countries, worsened by economic fallout emerging from the pandemic.

Countries such as Zambia have struggled to service external debt in recent years and became the first one to default on Eurobond while Ethiopia’s risk of default has heightened on the back of unfolding civil war which has hurt economic prospects.

Kenya, on the other hand, was forced to drop a bid to extend debt relief with Beijing beyond June after Chinese lenders, especially Exim Bank, opposed the deal reached by the world’s richest countries under the Debt Service Suspension Initiative framework.

This followed a stand-off that had seen Chinese financiers delay disbursements, resulting in a cash crunch for Chinese-funded projects in June.

dguguyu@ke.nationmedia.com

World Bank debt rises in Uhuru’s last days as China loans drop

World Bank and the International Monetary Fund (IMF) have stepped up lending to Kenya over the past three years, which has seen Chinese loan deals reduce.

www.businessdailyafrica.com

kwa nini upo obsessed na Kenya wewe?

 

[Babaguy]

kwa nini upo obsessed na Kenya wewe?

Actually he's not obsessed with kenya.

His trying prove to zezeta he has a take.

What that take is,

Only zezetas

 

[Somi]

Deni la Kenya ni $96.6 bln zaidi ya mara tatu ya deni la Tanzania

Source : ITV

 

[Geza Ulole]

kwa nini upo obsessed na Kenya wewe?

Nyie watu gani mna madeni mpaka matakoni? Nangojea gdp rebasing wiki ijayo utaskia Kenya's GDP is $200 bln and hence Debt to GDP ratio of is 45% waaaaay below the IMF levels of 67%!

 

[nomasana]

kwa nini upo obsessed na Kenya wewe?

you should be worried when they stop obsessing about Kenya.

No one is obsessed with what's beneath them, people obsess with what's above them.

 

[Geza Ulole]

 

[Numbisa]

Mikopo hatari

 

[Geza Ulole]

Kenya is raising debt ceiling and Samia’s on borrowing binge​

SATURDAY MARCH 05 2022​

China Communications Construction Company and Entebbe airport officials at the new cargo centre. PHOTO | AFP

​

Summary​

• Over the past decade, growth in interest payments has outpaced growth in exports. But the National Treasury blames Covid-19 for the risk of debt distress.
• In Tanzania, there has been a rising chorus against a debt binge by the Samia administration, a debate that earlier this year saw former Speaker of National Assembly Job Ndugai pushed out for his criticism.
• In Uganda, a top Chinese lender has imposed "aggressive" repayment terms on a $200 million loan to expand Uganda's Entebbe international airport.

By JAMES ANYANZWA
More by this Author

Kenyan lawmakers are pushing for a change in legislation to accommodate a Ksh4 trillion ($35.39 billion) new debt to fund a rising budget deficit amid warnings that the country is headed into debt distress.

Kenya’s National Treasury is considering options of financing a Ksh846 billion($7.48 billion) deficit in its Sh3.2 trillion ($28.31 billion) spending plan for 2022/2023.

The MPs are now pushing for a law change to increase the state’s borrowing limit to Sh13 trillion ($115.04 billion) from Ksh9 trillion ($79.64 billion), the second increment in less than three years even as public debt hit Ksh8.02 trillion ($70.97 billion) in December 2021.

Two political formations in Parliament -- Azimio la Umoja led by President Uhuru Kenyatta and ODM leader Raila Odinga and Kenya Kwanza Alliance led by the disgruntled Deputy President William Ruto -- have been battling over the proposal.

The Azimio MPs this week successfully pushed an amendment to the 2022/23 Budget Policy Statement directing the Treasury to amend the Public Finance Management law to help plug the budget deficit.

They also overturned a Budget and Appropriations Committee report that had imposed a Ksh400 billion ($3.53 billion) cap on debt to avoid breaching the Sh9 trillion ($79.64 billion) ceiling.
ls drop

Weakening indicators​

In 2019, Kenya breached the East Africa Community debt ceiling after its MPs voted to increase the limit to Ksh9 trillion ($79.64 billion) , compromising the government’s bid to comply with the region’s debt target of 50 percent of GDP and weakening the country’s debt sustainability indicators.

Kenya’s non-concessional loans have raised fiscal vulnerabilities and interest payments to nearly 20 percent of revenues.

The Parliamentary Budget Office (PBO) says the country has surpassed debt sustainability thresholds, particularly the debt service-to-revenue ratio, implying that the economy is not generating enough revenues to cover its debt payments.

“The risk is that the country will continue to borrow to repay the existing debts and not for development expenditure as contemplated in law,” said PBO.

In 2021, the International Monetary Fund rated Kenya’s risk of external debt distress and overall risk of debt distress as ‘high’. Kenya’s public debt as a proportion of GDP was 66.2 percent, up from 48.6 percent in 2015.

Over the past decade, growth in interest payments has outpaced growth in exports. But the National Treasury blames Covid-19 for the risk of debt distress.

“The debt sustainability ratios worsened following the adverse effects of Covid-19 pandemic on the economy,” it said.

Kenya’s stock of public and publicly guaranteed debt stood at as at Ksh8.02 trillion($70.97 billion) in December 2021. This comprised Ksh4.03 trillion ($35.66 billion) domestic debt and Ksh4.17 trillion ($36.9 billion) in external debt stock.

In Tanzania, there has been a rising chorus against a debt binge by the Samia administration, a debate that earlier this year saw former Speaker of National Assembly Job Ndugai pushed out for his criticism of President Samia Suluhu’s "excessive" borrowing.

Read: Samia hints at a cabinet reshuffle, tells off critics

Also read: Tanzania risks debt distress: World Bank

Tanzania’s stock of national debt amounted to $37.57 billion by end of January this year, an increase of $133.2 million from December 2021 and $6.27 billion from the amount recorded in January 2021. External debt accounted for 75.4 percent ($28.17 billion) of the national debt stock . Of the external debt 33 percent ($9.29 billion) is commercial loans.

Tanzania’s debt service payment amounted to $17.6 million, of which $9.7 million was principal repayment.

​

Uganda ‘bad’ loan​

In Uganda, a top Chinese lender has imposed "aggressive" repayment terms on a $200 million loan to expand Uganda's Entebbe international airport.

Read: China puts 'aggressive' terms on Entebbe airport loan: researchers

Under the loan from China's Exim Bank to modernise the Entebbe Airport, the Ugandan government is required to channel all revenue from the country's only international airport into an account held jointly with the lender. The government is then required to use part of the revenue to repay the loan each year before it can invest in public services.

State-owned China Communications Construction Company began repairing runways and building new hangars in 2016 and the work is expected to be completed this year.

Provisional data from the Bank of Uganda shows that total public debt stock as at October 2021 stood at Ush 73.78 trillion ($20.72 billion) while external debt exposure amounted to $12.78 billion in the period.

Kenya is raising debt ceiling and Samia’s on borrowing binge

MPs in Nairobi are pushing for a law change to increase the state’s borrowing limit to $115.04 billion.

www.theeastafrican.co.ke

 

[Geza Ulole]