(Nairobi) – Kenya has seen a steep rise in the funds it allocates to pay down its foreign debt, with the amount nearly doubling in the fiscal year ending June 2024, reaching Ksh 756 billion. This increase in debt payments comes as the government intensifies efforts to reduce reliance on domestic borrowing, which has put considerable strain on the private sector.
The surge in repayment obligations is largely due to the maturing of a Eurobond loan of Ksh 260 billion, which significantly impacted the country’s financial state during the first half of the 2023-2024 fiscal year. According to a new report from the National Treasury on public debt, Kenya’s foreign debt payments rose from Ksh 402.4 billion to Ksh 756 billion over the past year, marking a notable increase compared to the prior fiscal period.
In the fiscal year 2022-2023 alone, the amount allocated to foreign debt payments rose by Ksh 96 billion. The report further reveals that the government also spent Ksh 807 billion to service domestic debt, bringing the total public debt to Ksh 10.6 trillion.
The proportion of domestic debt as part of the total national debt rose to 51%, up from 47% in the 2022-2023 fiscal year, while the share of foreign debt decreased to 49% from 53%. The Treasury’s report, presented to the National Assembly, indicates that by the end of June 2024, domestic debt reached Ksh 5.4 trillion, marking a Ksh 578 billion or 12% increase over the previous year, when it stood at Ksh 4.8 trillion.
Kenya’s Public Debt Overview
| Debt Category | Amount (June 2023) | Amount (June 2024) | Change |
|---|---|---|---|
| Foreign Debt | Ksh 402.4 billion | Ksh 756 billion | +Ksh 353.6 billion |
| Domestic Debt | Ksh 4.8 trillion | Ksh 5.4 trillion | +Ksh 578 billion |
| Total Debt | Ksh 10 trillion | Ksh 10.6 trillion | +Ksh 600 billion |
National Treasury Secretary Chris Kiptoo, while launching the report last week, stated that Ksh 1 trillion has been earmarked for public debt repayment in the current fiscal year. Of this, Ksh 750 billion will go towards servicing domestic debt obligations.
Dr. Kiptoo expressed confidence that recent measures by the Central Bank of Kenya to stabilize the foreign exchange market and control interest rates will play a vital role in ensuring the government can manage public debt without excessive expenditure.