Nairobi [Kenya], August 29 (ANI): Kenya's debt level has reached record highs despite President William Ruto's vow to tame the country's appetite for loans, according to news reports, Portal Plus reported.
As per data, the total public debt of Kenya has risen by a record 10.8 billion US dollars to 70.75 billion US dollars, breaching the debt ceiling amount set in June 2022 by the parliament and exceeding the previous year's debt by more than 18 per cent.
The increase in public debt was attributed to external loan disbursements, exchange rate fluctuations and the uptake of domestic and external debt.
As per reports, the loan repayment costs, mainly to China, have shot up as the local currency trades at record lows of around 144 shillings to the dollar. The cost of debt servicing in the fiscal year that ended in June was USD 2.7 billion, of which the highest payment - 107 billion shillings (USD 743 million) - went to China.
Kenya's debt repayment to China continues to rise, as per the citizen website. An increase in debt repayment was due to factors like the maturity of some of the loans taken from China. For example, the Standard Gauge Railway (SGR) was financed by a loan from China Exim Bank that matures in 2027. The government is also repaying loans taken from China to finance other infrastructure projects, such as the Mombasa Port expansion and the Lamu Port and Lamu-Southern Sudan-Ethiopia Transport Corridor (LAPSSET).
It must be noted though that Chinese loans account for roughly 64 per cent of Kenya's current stock of bilateral external debt and only 17 per cent of total external public debt. Multilateral borrowing is almost double the bilateral total, with the World Bank being Kenya's largest single external creditor.
"It is too early to say whether China will come to the rescue of Kenya, which is still negotiating with the IMF for a possible bailout."Global credit rating agencies have downgraded the country's ability to repay international lenders from "stable" to "negative", citing tax hikes and social unrest.
Kenyan lawmakers have thus voted to change the debt ceiling from a fixed shilling amount to a proportion of the country's gross domestic product (GDP), although the amendment is yet to be passed by the Senate. However, the increase in debt repayment to China is a worrying development for Kenya. It is a sign that the country is struggling to manage its finances, and it is likely to have a negative impact on the economy.
Experts express fear of Kenya going Sri Lanka way and are sceptical about China coming to the rescue of Kenya which it considers a strategically important country, as per Portal Plus. (ANI)