Kenya’s total public debt load edged closer to the Sh6 trillion mark in the first week of this month even as it emerged that 44 new foreign loan agreements have recently been put before Parliament for approval, or are under negotiation.
Total domestic debt is at Sh2.836 trillion while the total external public liability was Sh3.066 trillion — making a total of Sh5.902 trillion.
However, this did not factor in external debt that may have been incurred between July and this month, which could bring the total to at least Sh6 trillion.
Just last week Parliament also approved the increase in debt threshold to Sh9 trillion as part of its efforts to ensure that the Treasury is able to meet its annual Budget going forward.
As at the end of the 2018/19 fiscal year in June, the total public debt as a percentage of the gross domestic product (GDP) was 55.2 percent with the gross amount at Sh5.8 trillion.
The Treasury insists that the debt, which it says it assesses with a 20-year forward outlook, is still sustainable as long as it is below the threshold of 70 percent of GDP.
“Kenya’s debt ratios show external debt is within sustainable levels for a country rated as a strong performer. The debt sustainability indicators show that Kenya faces a moderate risk of external debt distress,” said the Treasury in its preliminary Budget for the next fiscal year.
“Total public debt as a proportion of GDP remains well below the Lower-Middle Income country debt sustainability benchmark of 70 percent of GDP in present value terms. Overall, debt sustainability analysis indicates that public sector debt continues to be sustainable although Kenya’s current external debt risk of distress categorisation has moved from low to moderate,” said the Treasury.
The biggest increase in Kenyan public debt in recent years has come from China and also multilateral lenders such as the World Bank.
Citi Global Markets analysts said that Kenya — alongside Angola, Ethiopia and Congo — is among the countries in Africa that has received the largest disbursements from China.
“The China-Africa Research Initiative at Johns Hopkins University research efforts show that from 2000-2017, Chinese disbursements to Africa from various sources totalled $143.4 billion … Of this total, the reality is that the bulk was committed to a relatively small group of countries: Angola ($19.2 billion), Ethiopia ($13.1 billion), Kenya ($9.8 billion) and Republic of Congo ($7.4 billion),” said Citi.