Kenya’s debt to rise to Ksh10.6 trillion in June 2025
Kenya’s outstanding debt will reach Ksh10.6 trillion by the end of June 2025, according to National Treasury estimates.
This means that Kenya will have borrowed an additional Ksh 3.3 trillion, which will add to the current debt stock of Ksh 7.3 trillion at the end of December 2020, implying a 45.2% increase in debt. new borrowings over the next five years.
The estimates contained in the 2021 Fiscal Policy Statement (DBP) reveal the impact of the persistence of large budget financing deficits over the years.
The deficits in question were recently exacerbated by the COVID-19 pandemic which reduced the government’s ability to finance its spending from tax revenues alone.
Kenya’s current budget which runs through June 30, 2021, for example, reveals the impact of widening budget deficits on overall public debt growth.
Expenditures through June are estimated at Ksh2.9 trillion, which includes Ksh18 trillion in total income, leaving a gaping hole of over Ksh1 trillion.
Net of grants for this deficit, Kenya will have borrowed Ksh 965.6 billion by the end of June to fill the tax revenue gap.
This will see the stock of debt increase to Ksh7.7 trillion at the end of fiscal year 2020/21, from Ksh6.7 trillion in June 2020, which means Ksh1 trillion for the gross debt stock. over 12 months.
Backlash from IMF loans
Kenya recently contracted Loan of Ksh 255 billion from the International Monetary Fund (IMF) constitutes part of the financing of the deficit in the year ending in June.
While Kenyans have taken up arms Protesting the approval of the 3-year loan to the IMF Executive Board, even more loans are lined up before the year-end on June 30.
This includes a loan of Ksh 82.5 billion from the World Bank’s Development Policy Operations (DPO) and Ksh 123.8 billion from a new Eurobond issue.
In the next fiscal year, Kenya is still expecting Ksh 74.3 billion from the World Bank and an additional Ksh 124.3 billion from the Eurobond (product which could result from a single bond issue this year).
Beginning in FY2022/23, the bulk of lending is expected to come from program-specific facilities as the World Bank’s DPO products dry up during the year.
In June 2025, the outstanding debt of Ksh10.6 trillion will include Ksh4.8 trillion in external loans and Ksh5.8 trillion in locally contracted debt.
The outstanding debt will nevertheless be equivalent to 62% of gross domestic product (GDP) against 69% currently.
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