Treasury CS Ukur Yatani during the Budget reading on June 11, 2020. Kenya’s public debt stood at Sh7.28 trillion as at end of December 2020, an amount National Treasury CS Ukur Yatani described as sustainable but classified as high risk.
In a presentation made on his behalf to the Senate Committee on Finance and Budget, the Director-General, Public Debt Management Haron Sirma said amount was equivalent to 65.6 per cent of Gross Domestic Product.
Sirma nonetheless said they want the debt ceiling increased from the current Sh9 trillion to allow the government to borrow some more.
He pointed out that 57 per cent of the debt was from external borrowing while 43 per cent was sourced domestically.
Sirma was outlining the ministry’s strategy on refinancing maturing public debt and financing the fiscal deficit at the lowest cost and minimum risks.
“The 2021 debt strategy is underpinned by the need to move away from relatively high interest cost of domestic debt, safeguard credit flow to the private sector and rely more on long term external financing, preferably concessional loans,” he stated.
The strategy covers the period 2021/22 to 2023/24 financial years.
It was prepared against the backdrop of the Covid-19 pandemic shock which led to slowdown in economic activities, adversely affecting the government’s fiscal position.
The 2020 credit rating by major sovereign rating agencies including Standard and Poors, Moody’s and Fitch placed Kenya at B+ with negative outlook, a downgrade from the previous review. Moody’s Investors Service on other hand revised the outlook on Kenya’s rating to negative from stable, citing the country’s rising risks to meet its borrowing requirements and debt payments.
The agency affirmed the B2 rating due to the country’s diversified economy “with high growth potential and quite deep domestic financial markets".
The inclusion of state agencies loans and counties in the public debt will push the country’s debts above a ceiling of Sh9.1 trillion set in 2019.Treasury is said to be seeking the debt ceiling to be increased from Sh9 billion to Sh12 billion but some MPs have indicated that they will oppose the plans.Some lawmakers say it would be untenable to allow the Treasury to go on another borrowing spree by raising the debt ceiling.They say the proposal might not sail through Parliament because of the country’s sorry economic situation.Sirma said the purpose of borrowing is partly to finance projects approved by Parliament.Makueni senator Mutula Kilonzo Jr said the National Treasury must make public or […]
