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China’s Sh487bn debt load tops list of foreign lenders

Henry Rotich, the Treasury secretary. FILE PHOTO | NMG
Henry Rotich, the Treasury secretary. FILE PHOTO | NMG 

China has once again topped the list of 14 countries that advanced bilateral loans to Kenya in the past year, according to newly released Treasury data.

Beijing gave Nairobi a total Sh487 billion ($4,733.94 million) in the 12 months through end of September 2017.

The report shows that in just three months to September, China lent Kenya Sh122.73 billion ($119.16 million).

Japan, which has lent Kenya ($879.29 million) is second, followed by France ($687.89 million), and Germany ($314.25 million) respectively. Other lenders jointly account for $362.06 million in bilateral loans to Kenya.

IDA/IFAD and African Development Bank (ADB/ADF) top the list of multilateral financiers to Kenya having lent $5,132 million and $1,993 respectively.

Official data shows that Kenya’s overall public debt increased by Sh777.5 billion in the year to September 2017 to reach Sh4.4 trillion.

Most notable is the speed at which the country is accumulating public debt which rose from Sh3.7 trillion in September 2016 to Sh4.486 trillion in September 2017, according to the latest budgetary and economic review report.

The gross debt comprises of 51.5 per cent  external and 48.5 per cent of domestic debt. “The overall increase (Sh777.5 billion) is attributed to the increase in external debt arising from exchange rate fluctuations and, disbursements of external loans during the period,” Henry Rotich, the Treasury secretary, says in the first quarter report for the financial year 2017/18.

The report, which Leader of Majority Aden Duale tabled in Parliament, shows that the net public debt increased Sh772.3 billion from Sh3.27 trillion as at end of September 2016 to Sh4.04 trillion by end of September 2017.

The stock of domestic debt rose by Sh326.5 billion from Sh1.85 trillion in September 2016 to Sh2.17 trillion in September 2017. The report shows that the stock of Treasury Bills held by Central Bank, Commercial Banks, Non-Banking Financial Institutions and Non Residents increased by Sh106.6 billion from Sh618.2 billion in September 2016 to Sh724.8 billion in September this year.

The Treasury says external public debt stock increased by $4,216.1 million from $18,155.1 million in September 2016 to $22,371.2 million by end of September 2017.

“The debt stock comprised 32.1 per cent, 36.5 per cent, 30.7 per cent and 0.7 per cent of debt owed to bilateral, multilateral institutions, commercial banks and suppliers’ credit, respectively,” Mr Rotich said.

The increase is attributed to disbursements made during the period. The Treasury says the total cumulative debt service payments to external creditors amounted to Sh26.4 billion at the end of September 2017.

“This comprised of Sh9.1 billion (34.4 per cent) principal and Sh17.3 billion (65.6 per cent) interest.

Cumulative external financing between July 1 and September 30, 2017 amounted to a net borrowing of Sh7.5 billion. Inflows amounted to Sh16.5 million against a target of Sh29.7 billion in the period under review.

“The actual disbursement amount included Sh2.1 billion project cash loans, Sh14.2 billion project loans appropriations in aid (A.I.A) and Sh244 million project loans A.I.A  for standard gauge railway (SGR),” Mr Rotich said.

On domestic financing, Mr Rotich said net borrowing amounted to Sh49.2 billion against a target borrowing of Sh39.3 billion by end of September 2017.

The borrowing comprised of Sh12.6 billion from commercial banks, Sh26.3 billion from non-banking financial institutions, Sh1.9 billion from non-residents and Sh8.3 billion from the Central Bank of Kenya.

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