Former President Uhuru Kenyatta’s administration went on a borrowing spree before the General Election, spending Sh854.14 million daily in the four months to the end of August.
State documents tabled in Parliament show that the Treasury inked six loans totalling Sh105 billion between May 1 and August 31, 2022.
This means that the Treasury borrowed Sh854,148,675 daily for the four months tapped from bilateral, multilateral and commercial creditors.
The Public Finance Management Act requires the Treasury to provide a quarterly update to Parliament on all new loans contracted by the government.
The law also mandates the Treasury to present to Parliament a report outlining all new loan balances brought forward, carried down, drawings and amortisations obtained from outside Kenya or denominated in foreign currency.
The new loans come amid concerns over the ballooning debt that currently stands at Sh 8.6 trillion.
In June, Parliament voted to increase the public debt ceiling to Sh10 trillion as a stop-gap measure to allow President William Ruto’s administration to borrow Sh846 billion to plug the budget deficit in the fiscal year ending June 2023.
The debt ceiling adjustment was meant to accommodate the 2022/23 budget without raising the debt cap.
“Four of the multilateral lenders, one from a bilateral lender and one commercial lender. The total value of the six new loans signed is equivalent to Sh105,060,287,110. One of the loans has been partially disbursed by the time of submitting this report,” Ukur Yatani, the former Treasury Cabinet Secretary, said in a report tabled in Parliament.
The huge debt includes a one-bullet syndicated short-term multi-currency loan worth Sh36.2 billion that will be repaid in the form of a bullet repayment on September 30, 2025. The loan was signed on August 23 between Kenya and the Eastern and Southern African Trade Development Bank.
“The interest rate of the loan is a reference rate plus a margin per annum. The Reference Rate for USD and Euro is 6M Term SOFR and 6M Euribor respectively,” the Treasury said in disclosures to Parliament.
“The margin for USD and Euro dominated tranche is 4.45 per cent per annum and 4.30 per cent per annum respectively.”
The Treasury said the interest on overdue amounts will be increased by two per cent per annum above the applicable rate.
Part of the Sh105 billion loan is meant to aid the micro, small and medium enterprises (MSMEs), budget support for the current financial year and national agricultural value chain projects.
Kenya entered into a Sh10.5 billion loan with the African Development Bank for a general budget support programme whose objective is to strengthen and support inclusive post-Covid-19 pandemic economic recovery through improved governance and enhanced industrial development and competitiveness.
The programme aims to deepen the support for Kenya’s medium-term development agenda by emphasizing enhancing fiscal performance, strengthening industrial development and supporting the development of MSMEs, social protection coverage and women empowerment.
The Treasury also signed a Sh26.4 billion from the International Development Association to increase market participation and value addition for targeted farmers in project areas.
The State also borrowed Sh15.67 billion from the IDA at a 1.25 per cent per annum with a service charge of 0.75 per cent per annum on the withdrawn credit balance to enhance pastoralists’ access to financial services for drought risk mitigation.
The government also borrowed Sh12.67 billion from IDA for the Eastern Africa regional statistics programme for results. The loan is aimed at strengthening the regional harmonisation, dissemination and use of core economic and social statistics for Kenya, Rwanda and Tanzania.
Kenya also borrowed Sh3.62 billion from the Khalifa fund of the United Arabs Emirates to support the MSMEs.
