Kenya’s President William Ruto has assured the public and the markets that the country will be able to pay the first $300 million, or KES 500 billion, installment of the $2 billion Eurobond debt that matures next year.
He said that the government has secured enough funds to meet its debt obligations and avoid default.
While addressing Parliament on Thursday, President Ruto said that the country has made significant progress in mobilizing resources to service its debt.
“Our efforts to stabilise the situation have yielded such progress that next month, in December, we will be able to settle the first $300 million installment of the $2 billion Eurobond debt that falls due next year.”
“I can now state with confidence that we will and shall pay the debt that has become a source of much concern to citizens, markets, and partners,” he said.
Kenya’s public debt comprises both external and domestic debt, where the ratio of external debt to domestic debt remains high at 54.3 per cent to 45.7 per cent as of September 2023.
President Ruto’s announcement comes amid growing worries about Kenya’s debt sustainability and its impact on the economy.
According to the Central Bank’s Quarterly Economic Review Report for Q2’2023, the public debt stood at Kshs 10.2 trillion (equivalent to 70.2 per cent of GDP) as of June 2023, an 18.8 per cent increase from the Kshs 8.6 trillion (66.2 per cent of GDP) recorded in June 2022.
“Kenya’s debt level has been on the rise due to the continued growth in fiscal deficits over the years, averaging 7.6 per cent of the GDP for the last nine financial years, driven by the sustained recurrent expenditure and a focus on development projects,” cited Cytonn Investments.
“Over a ten-year period, the growth in government revenue registered a 10-year CAGR of 11.2 per cent to Kshs 2.4 trillion as at the end of FY’2022/23, from Kshs 0.8 trillion at the end of FY’2012/13.
This outpaced the growth of government expenditure at a 10-year CAGR of 9.5 pe cent to Kshs 3.1 trillion at the end of FY’2022/23, from Kshs 1.3 trillion at the end of FY’2012/13.”