Kenya’s external debt shrunk by Sh926.1million in the three months to March as the shilling recouped its value against major foreign currencies, bringing the savings closer to the government’s target to net Sh1 trillion in gains from the revaluations of the local currency.
Data by the National Treasury shows that Kenya’s external debt stock dropped to Sh5.16 trillion at the end of March from Sh6.08 trillion at the end of last year on the revaluation gains.
Kenya has however continued to increase its external borrowings in nominal terms with the debt stock expressed in US dollars rising marginally to $39.18 billion compared to $38.92 billion over the three- month review period.
Domestic borrowing has meanwhile grown faster at 3.6 percent to Sh5.23 trillion from Sh5.05 trillion at the end of last year.
CBK had estimated savings in external debt from the appreciation of the local currency at Sh1 trillion with a single unit movement in the shilling yielding a Sh40 billion reduction in external debt.
“When a shilling gains by a unit against the greenback, our external debt drops by Sh40 billion. We are now at 30 units’ tops, slashing the debt by at least Sh1 trillion,” CBK Governor Kamau Thugge said in April.
Kenya’s total debt stock closed March at Sh10.39 trillion or an equivalent of $78.9 billion compared to Sh11.13 trillion or $71.2 billion in December 2023.
The Kenyan shilling had posted gains of 16.1 percent against the greenback by March, selling at Sh131.56 from Sh156.98 as of December 29.
The strengthening of the unit is attributed to the end of speculation in the foreign exchange market which was triggered by the overhang of investor jitters over the maturity of Kenya’s debut Eurobond.
Kenya’s external debt at the end of March consisted of Sh4.12 trillion in loans to bilateral, multilateral, and commercial banks with outstanding debt to lenders such as the World Bank and the International Monetary Fund (IMF) standing at Sh2.65 trillion.
The balance of Sh977.35 billion included Sh943.2 billion in outstanding international sovereign bonds or Eurobonds while non-residents held Sh34.05 billion and Sh5 billion in Treasury bonds and bills respectively.
The falling public debt stock comes at a time when the National Treasury is striving to bring down debt levels to the anchor prescribed in the Public Finance Management Act at 55 percent of gross domestic product (GDP) in net present value terms.
Kenya’s value debt as a percent of GDP stood at 64.4 percent as of June last year and is expected to hit 53.1 percent of GDP in June of 2026 complying with the PFM requirement.
Foreign currency debt as a percentage of total debt stood at 51.5 percent while the average time to maturity for the total debt portfolio stood at 10 years.
The National Treasury Cabinet Secretary has five years since November last year to adhere to the debt anchor.
Kenya’s public debt is presently assessed as sustainable but is rated high on the risk of debt distress.
