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Kenya’s public debt has hit Sh5 trillion mark for the first time, raising questions over the country’s ability to sustain the load in long term.
As at February this year, Kenya's total outstanding external debt stood at Sh2.563 trillion, while Sh2.448 trillion is owed to local lenders, making a total Sh5.011 trillion, Business Daily reports.
This means that the country will in the next several years spend a sizable part of its budget on debt servicing obligations, including interest and principal repayments, which is likely to stifle spending on development.
Speaking during a recent forum organised by the Vision 2030 Delivery Board, Central Bank of Kenya (CBK) Governor Dr Patrick Njoroge attributed the continued appetite for borrowing to corruption.
“It (corruption) affects our economy and our society first by shifting the resources away from the areas of greatest need into personal pockets or for the people that are involved in corruption. You end up having no money to finance education, no money to pay nurses, no money to repair roads because some of the resources have been deviated into other areas,” said Dr Njoroge.
Genghis Capital, an investment bank, projects that debt servicing could consume up to 51.56% of revenue in fiscal year 2018/19 from 40.13% currently, surpassing the 30.00% debt sustainability threshold by a wide margin.
“The external debt redemptions will feature significant maturities in Standard Chartered syndicated loan (Sh78.74 billion) and 5-year debut International Sovereign Bond (Sh78.30 billion). Overall, public debt redemptions will comprise 54.06 per cent of total public debt obligations in fiscal year 2018/19,” the investment bank said.
“That ratio shows how health an economy is. Its about half of the revenue collected and that is a big issue."
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Kenya should stop the importation of luxury, expensive and unnecessary vehicles. It should also liquidate all the assets of the corrupt officials and pay off debt. Stop importation of items that we can produce locally. We should stop borrowing to finance development that we cannot afford. We are about to travel Moi's path, that of becoming a slave nation due to greed and delivering our books to Washington to explain our expenditure. Accepting any interest rates, for our citizenry, any goods being dumped into our country because we do not have bargaining power due to the size of debt. This is a dangerous zone. Our leaders need to wake up. God help Kenya!!
This is the No. 1 CONSEQUENCE of a RIGGED Presidency. Na Mambo Bado! Mpande THULUMA, Mtavuna THULUMA. Period.
@Sokwe u mite b my bratha coz u write lots of sence.Good job.I remember when I lived in the states I kept borrowing in my credit union invested that cash back home n 16 years later I thank God I borrowed it.I started borrowing 5,000$ in 2002 n when I left 2010/2011 I had borrowed upto 110,000$ on n off n at one time for 3 years the money to pay off my loan was coming from Kenya coz I was making good cash.So borrow n invest in development.Usa gave me a platform to b where I am but many folks says I hate USA which I don’t.All I want is for pple to know what life in USA is.
Debt is good if the proceeds are invested in public projects with a return on investment that exceeds the cost of borrowing. Investment in, for example the Nairobi/Mombasa Highway or the SGR are worthwhile since they add more value to Kenya than the cost of borrowing. US debt today is at $21.5 trillion or shs. 42.6 trillion per State. And America is still borrowing to expand government systems. Why not Kenya?