NAIROBI, Kenya, Mar 21 – Treasury has just signed an $800 million (Sh82 billion) syndicated loan from four commercial banks to fund development expenditure for this financial year.
The latest commercial loan pushes Kenya’s debt to Sh3.8 trillion, representing a debt to GDP ratio of 52.7 percent, 12.7 percentage points above IMF’s recommended benchmark for emerging countries.
According to Treasury, nearly half of the external debt is concessional compared to the costly commercial loans, with the other half held in domestic debts through treasury bonds and bills.
A $750 million (Sh7.6 billion) syndicated loan borrowed in 2015 is due for repayment this year, while the $2 billion Euro bond will mature in 2024, further exerting pressure on the government to set provisions for the payments.
The IMF, in its review of Kenya a year ago, said Kenya’s risk of external debt distress remains low but notes there is need for reduction in the deficit over the medium term.
“Gross public debt increased from 44 percent of GDP at end-2013 to 52 percent at end-September 2015. In the baseline, public debt is expected to stabilize around 54-55 percent of GDP in 2017-19 and gradually decline thereafter,” IMF projects.
The expected decline is on account of lower imports of oil products and a significant reduction in SGR-related imports.
But how does Kenya’s public debt compare with other countries? The World Economic Forum ranks Kenya at number 77 out of 138 countries using the GDP/debt ratio score.
Japan is the most indebted country with a score of 248.1 percent, followed by Greece (178.4pc), Lebanon (139.1pc). The United States, ranked at 128, has a debt to GDP ratio of 105.8 percent, but with the highest total debt of $17.9 trillion.
Hong Kong, Brunei and Saudi Arabia are the least indebted countries at 0.1, 3.1 and 5.8 percent respectively. Algeria is fourth globally at 8.7 percent, while Nigeria is seventh at 11.5 percent of the GDP.
In Africa, Kenya lies 14th, ranking slightly lower than Zambia (52.9%), Zimbabwe (53%) and Tunisia (54.5%).