By Riches Soberekon
Kenya’s debt has hit all-time highs, even though President William Ruto promised to reduce borrowing.
Treasury data shows that the total public debt surged by a massive 1.56 trillion shillings ($10.8 billion) in the fiscal year ending on June 30, reaching 10.1 trillion shillings ($70.75 billion).
This breach surpassed the debt ceiling of 10 trillion shillings.
The Treasury attributed the rise in public debt to external loan disbursements, exchange rate fluctuations, and the uptake of domestic and external debt.
The repayment costs for loans, particularly from China, have surged due to the weakening local currency, which now stands at approximately 144 shillings to the dollar.
In the fiscal year that concluded in June, Kenya incurred debt servicing costs of 391 billion shillings ($2.7 billion). China received the highest payment of 107 billion shillings ($743 million).
This mounting debt burden has raised concerns among global credit ratings agencies, including Fitch Ratings, which recently downgraded Kenya’s ability to repay international lenders from “stable to negative.” They cited tax hikes and social unrest as contributing factors.
In June, Kenyan lawmakers voted to change the debt ceiling from a fixed shilling amount to a percentage of the country’s gross domestic product (GDP). However, the amendment is still pending approval by the Senate.
President Ruto, who took office last year, promised to revitalize the economy in Kenya, a nation of approximately 53 million people.
Economic growth slowed to 4.8 percent in 2022, down from 7.6 percent the previous year.
The International Monetary Fund (IMF) projects that the economy will expand by over five percent this year.
Ruto outlined his vision for an “bottom-up” economic transformation, pledging to reduce government debt and implement policies that would uplift impoverished Kenyans.
