[SIZE=6]Kenya’s borrowing crosses the red line, putting the economy at risk - Kippra[/SIZE]

Sunday July 30 2017

Treasury Secretary Henry Rotich. FILE PHOTO |NMG

Kenya’s insatiable appetite for loans to fund mega projects poses a risk to the economy and narrows the window for future borrowing in the event of emergencies, a State-funded think-tank has warned.

The Kenya Institute for Public Policy Research and Analysis B also warns that Nairobi’s volume of public debt as a ratio of GDP has already surpassed the 50 per cent limit set by East Africa Community member States.[/B]

READ: Revealed: Banks with most expensive loans

As at March 2017, Kenya’s gross public debt stood at Sh4.04 trillion – equivalent to 52.6 per cent of GDP – according to latest data from the Treasury.

“The high level of public debt in Kenya narrows the window for future borrowing, and increases vulnerability to fiscal risk in the event of any urgent need for borrowing,” says the institute in its latest economic update titled Kenya Economic Report 2017.

“Kenya’s public debt was above the EAC convergence criteria threshold of 50 per cent of GDP,” says the report released on Tuesday last week.

A majority of President Uhuru Kenyatta’s flagship infrastructure projects are funded through debt mainly from China.

The borrowing frenzy has been fuelled by the debut Eurobond as well as China, which has recently upped the ante in doling out loans to Kenya, overtaking Japan as Nairobi’s biggest bilateral lender.

READ: Kenya’s foreign bank loans increase 65pc in 12 months

Sovereign bond

Kenya in June 2014 floated a $2 billion sovereign bond on the Irish bourse and later in December that year went back to the market for an additional $750 million in what is technically known as a tap sale.

Compared to regional peers, Uganda’s public debt burden was recorded at 38.6 per cent of GDP as at December 2016, according to data from Bank of Uganda.

The national debt ratio to GDP was recorded as 42.4 per pent for Burundi, Rwanda (37.3 per cent), and Tanzania (36.5 per cent), says the research.

Kenya had a total public debt mountain of Sh1.89 trillion in June 2013, equivalent to 42.0 per cent of GDP, meaning the burden has more than doubled under the UhuRuto regime.

READ: No let-up in Kenya’s appetite for Chinese loans as Treasury eyes a new deal for railway

The taxman collected Sh1.365 trillion in the year ended June 2017, translating to a public debt-to revenue ratio of 296 per cent, missing the Treasury’s target of lowering it to around 198.3 per cent this year.

The International Monetary Fund had earlier also issued a similar warning to that of Kippra.

“Kenya’s risk of external debt distress remains low, while overall public debt dynamics continue to be sustainable. However, margins have generally narrowed,” IMF says in an update dated March 2016.

“The bulk of Kenya’s external public debt carries concessional terms, but recent commercial borrowings entails significant repayment needs,” reads the IMF review paper.

READ: NDII: Sound public finance management must be on the ballot in August

Commercial loan
The 495-kilometre Mombasa-Nairobi standard gauge rail line, was financed through a $2 billion commercial loan from the Chinese government and a further $1.6 billion in a semi-concessional loan from Beijing.

China is also funding the ongoing second phase of the high-speed railway from Nairobi to Naivasha at $1.5 billion. In total, the line from the capital to Kisumu is expected to cost $3.6 billion, and will be financed via a loan from Beijing.

Japan has advanced Kenya ¥26.7 billion (Sh23bn) to fund the building of a second terminal at the port of Mombasa expected to be completed by 2018; with a capacity of 1.2 million containers.

National Treasury Henry Rotich has declined to publish a schedule of how the Eurobond cash was spent, despite an earlier promise to do so.


Unlike you Babuonists who think that old man is a god, we in JP are open to criticism.

I for one think that Uhuruto overdid things as far as the debt is concerned, especially given that oil is not going to make money in the near future.


the % of debt probably must be higher, kulikuwa na rebasing of the economy some time back ikaongeza gdp

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Leo morning we were discussing about this here,and some people were not seeing the problems GOK is creating.

As we all know the first thing the elected politicians will do after 8th August is fight Serem and our outgoing MCA`s want to receive salaries until March 2018 wakiwa wamekalisha makende home. And GOK still expects us to pay taxes, watangoja.


Haha. The same brigade who will elect the chief economic saboteur as gavana and the plunderers in chief to the highest office. Yeah, you’re definitely better than Jakuonists.
The difference between the two brigades is that nasarites learn from mistakes, jubilidiots elect them.


Unlike uhuru, raila is not the COC…

not only did uhuru overdo the borrowing he has literally fucked up our country for good
No wonder they will be mere mortals after august 8th


mara kwa mara tumesema eurobond iliibiwo. there is no question about that.
it was blatant theft, outright conmanship and shameless lies.


In terms of transparency and accountability, Jubilee has performed very poorly, i’d give them a D-. The vision is good, i especially commend them for following through on the Vision 2030 plan which was really well crafted, the focus on infrastructure makes sense, problem is value for money, we are not getting that


Yes the problem is that the mistakes you learn is that teargas haipelekani sambamba na macho

Are we likely to be auctioned like Singapore?


consoling oneself using platitudes.

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I’m not a fan of Jubilee, however, let me come to their defence. UhuRuto inherited lots of debts while taking office. They might have piled more debts but it’s because they inherited debts too.
Read the article dated April 2013.

Let the country fuckin die already!

UhuRuto did not inherit the debt, they are part of the problem. Since Uhuru and Ruto got into office in 2013 Kenya`s debt has doubled.

In Kenya we tend to recycle politicians, both Uhuru and Ruto held various cabinet positions in Mois and Kibakis government. Uhuru was the finance minister of Kenya 2009-2011 but had to resign due to the ICC case, before that Moi has appointed him Minister of local government. Ruto was a minister of home affairs, minister of higher education and technology and minister of agriculture. Even kina Raila, Weta, Mudavadi and Kalonzo were part of both governments, so hao pia sio clean.

Yaani in short both Uhuru and Ruto were part of the governments that shafted Kenya and when they got the chance to form their own government, they doubled the rate of shafting mwananchi.

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