Kenya’s public debt has crossed the Sh7 trillion mark, the latest data from the National Treasury and Central Bank of Kenya (CBK) shows.
The total public debt hit Sh7.1 trillion in August this year down from Sh6 trillion at the beginning of the year.
This means the country added a total of Sh1 trillion to its public debt in eight months courtesy of the unrestricted borrowing in the wake of the Covid-19 pandemic.
Data indicates that the government borrowed a whopping Sh800 billion between March and August including the Sh81.3 billion ($749 million) Rapid Credit Facility (RCF) from the International Monetary Fund (IMF) and Sh108.5 billion ($1 billion) from the World Bank Development Policy Operations (DPO).
External debt surged by 15.6 percent to Sh3.7 trillion between March and August while domestic debt grew by 9.7 percent in the same period to Sh3.4 trillion. A lion’s share of the local debt (67.12 percent) is held in Treasury bonds (T-bills).
The Parliament Budget Office (PBO) in its latest report warned of increased debt pressure amid low domestic revenues and increased expenditure under the Covid-19 crisis.
PBO said the country’s debt is expected to hit Sh7.5 trillion in 2021 while the Sh9 trillion ceiling approved by MPs last year will be surpassed at the end of the 2022/23 fiscal year.
“The 2020/21 financial year will present difficult economic conditions for fiscal consolidation measures to maintain debt at sustainable levels,” noted PBO.
The country’s public debt, which has raised sustainability questions, currently stands at about 70 percent of the GDP. President Kenyatta previously downplayed concerns over the huge debt, saying Kenya must borrow if it is to realize tangible development.