Kenya’s public and guaranteed debt hit KSh7.7 trillion in June from KSh7.28 trillion as of December 2020., according to the Central Bank of Kenya in its weekly bulletin dated July 16.
The country’s debt comprised of KSh 3,697.7 billion domestic debt (47.9 per cent) and KSh 4,015.3 billion external debt.
Composition of Government Domestic Debt by Holder
Commercial Banks are the leading holders of the Government’s domestic debt as of 9th July 2021, at 50.74 per cent, followed by pension funds (31.11 per cent), insurance firms (6.75 per cent), other investors ( 5.94 per cent) and Parastatals(5.45 per cent).
Kenya’s public debt has been projected to rise to Sh8.6 trillion by June 2022 according to the 2021 Budget Policy Statement and Sh9.4 billion in the subsequent financial year.
In June, the government received KSh80.9 billion from the World Bank and raised KSh107.9 billion from a Eurobond offer for budgetary support.
The International Monetary Fund (IMF) approved KSh44.2 billion disbursement, following the release of KSh34.45 billion in April.
Market analysts note that public debt management complexities were worsened by the double fiscal shocks from the Covid-19 pandemic.
“Deficits have dramatically widened and debt service costs have surged in part due to weak domestic currencies,” NCBA Bank said in its economic forum for 2021 held in February.
“Prior to the crisis, public debt had risen to about 63 per cent of GDP, with an equal composition of the domestic and external composition. The high proportion of external borrowing (52% of total debt) has increased vulnerabilities to external shocks through the exchange rate channel.”