- The International Monetary Fund (IMF) noted Kenya has one the largest interest bill to revenue ratios in the region
- It explained that the February Eurobond issuance helped address the near-term refinancing pressures but raised external debt servicing
- Treasury projected that the country’s public debt will hit KSh 13.2 trillion by June 2027, up from KSh 10.3 trillion in June 2023
TUKO.co.ke journalist Japhet Ruto has over eight years of experience in financial, business, and technology reporting and offers profound insights into Kenyan and global economic trends.
The International Monetary Fund (IMF) has warned that Kenya could default on its loan obligations driven by low revenue collections and underperformance in exports.
Source: Twitter
What is Kenya’s debt-to-GDP ratio?
In its seventh and eighth reviews under the Extended Fund Facility and Extended Credit Facility, the Bretton Woods institution noted the public debt had increased to 73.1% of GDP in June 2024.
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The IMF revealed Nairobi has one the largest interest bill to revenue ratios in the region.
“Kenya remains at a high risk of debt distress with a marked deterioration in debt dynamics since the sixth EFF/ECF review, driven primarily by a weaker outlook for revenue mobilisation and continued underperformance in exports.
Public debt increased to 73.1% of GDP in 2023 (68.7% GDP in present value terms), the highest level in two decades, primarily on contributions from higher interest rates, real exchange rate depreciation, and a weaker primary fiscal balance than envisaged,” the IMF stated.
How Eurobond raised Kenya’s debt
The IMF explained that the February Eurobond issuance helped address the near-term refinancing pressures; it raised external debt servicing needs over the medium term.
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“Kenya faces large external and domestic debt service obligations in the coming years, with the average debt service to revenues ratio exceeding 60% during 2024–28,” it expounded.
However, the overall public debt/GDP ratio is expected to improve in 2024 attributed to a strong shilling against the United States (US) dollar.
What is Kenya’s debt?
Kenya’s National Treasury projected that the country’s public debt will hit KSh 13.2 trillion by June 2027, up from KSh 10.3 trillion in June 2023.
In its annual public debt management report for the 2022/2023 financial year, the exchequer noted that domestic and external debt is expected to increase to KSh 6.82 trillion and KSh 6.4 trillion, respectively.
The total debt service in June 2023 was KSh 1,199,436 million and is expected to rise to Ksh 1,899,715 million in June 2027.
Source: TUKO.co.ke
