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Banks cut loans to parastatals by 15pc, defaults up
Latest data from the Treasury indicates that amid the falling credit from banks, parastatals have resorted to borrowing from the State, which both guarantees their debt and lends to them from the exchequer.
Commercial banks cut their lending to parastatals by 14.7 percent in July compared to a similar period last year, the sharpest decline in four years. This comes as the State-Owned Enterprises (SOEs) struggle to service debts owed to their biggest lender, the government.
Overall, commercial banks, microfinance banks, and saving and credit cooperatives (saccos) jointly lent Sh78.9 billion to parastatals in July, a drop of 14.8 percent from the Sh92.5 billion they extended to the institutions during the same period last year, which was a growth from the previous period.
