Kenya’s total debt at nearly two-thirds of GDP – Treasury

Kenya’s gross public debt has increased by over Sh488.1 billion since the Kenya Kwanza administration took office, raising the total debt owed to both domestic and foreign lenders to about Sh9.6 trillion.

New data by the National Treasury, shows that as of March 30, 2023, the country had already increased its borrowing, as the new administration sought to meet its obligations in running the government.

The new figures now means that the country’s total debt is about 66% of the Gross Domestic Product (GDP) in nominal terms, compared to Sh9.1 trillion at 67% of GDP as of the end of December 2022.

The revelations follow a meeting held by the National Assembly’s Committee on Public Debt and Privatization, attended by Treasury principal secretary Chris Kiptoo who also briefed the committee on the Consolidated Fund Service Expenditures for Financial Year 2023/24.

Dr Kiptoo informed the Committee that as per the 2023/24 Budget Estimates’ fiscal framework, the external debt disbursement is currently estimated at Sh607.1 billion, out of which Sh475.6 billion will be used for external debt repayment, leaving net foreign financing of Sh131.5 billion.

In addition, the net domestic financing is expected to be at about Sh532 billion. This financing is close to a 50:50 ratio financing strategy of the Financial Year 2023/24 Medium-Term Debt Management Strategy (MTDS).

Further, the PS also told the Committee that the country expects a rise in ordinary pension due to the increase of the biennial pension at a rate of three percent beginning July 1^st, 2023, pursuant to the Pensions Increase Act. 

On the matter of compliance with Parliament resolutions in the 2023 Medium-Term Debt Management Strategy (MTDS) in relation to the financing of 2023/24 Budget Estimates, the PS noted that the National Treasury has developed draft guidelines for the operationalization of a sinking fund in conformity with Regulation 206 (1) of the Public Finance Management (National Government) Regulations (2015).

This he said, was to provide liquidity for timely funding for the redemption of government securities and payment of expenses. 

The guidelines, however, will be subjected to a public participation process before submission to Parliament for consideration and approval.

Part of the recommendations made on the MTDS were proposals to include the National Assembly tabling regulations for the establishment of a sinking fund dedicated to public debt servicing.