Kenya’s debt ranked 5th highest in Africa amid mounting concerns over its sustainability
The country's debt stood at Ksh4.6 trillion by the end of last year
The report dubbed Economic Insight: Africa noted that the total public debt which stood at Ksh 4.6 trillion by the end of last year increased by 19% in a single year, and has more than doubled since December 2013.
The study by the Institute of Chartered Accountants in England and Wales (ICAEW) however warned that the steep rise in debt levels posed a threat to the country's economic growth.
“The pace of public debt accumulation and the lack of a clear communication strategy regarding the government’s plan to address deficits have raised concerns about the sustainability of Kenya’s public finances,” read the ICAEW report.
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Kenya was placed fifth in terms of debt to GDP ratio (60%) behind Gabon (70%), Ghana (70%), Egypt (96%) and Mozambique (115%).
External loans
The public debt accumulation will be of concern to foreign investors who hold the largest portion of Kenya’s debt and will be closely monitoring how the Government manages the portfolio to ensure their investments are not at risk.
“The affordability of external loans will be determined by the yield demanded by investors, which in turn will be determined by perceptions of whether Kenya is able to keep its fiscal house in order,” stated the report.
ICAEW is of the view that base on Kenya’s high debt level, external donors and investors are likely to pile pressure on Kenya to present a clear debt servicing plan.
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The report comes a day after the National Treasury downplayed reports about the country's debt burden saying the government had maintained a healthy window to service its debt.
“There is still a lot of space between 50 per cent and 70 per cent of GDP,” said Treasury Principal Secretary Kamau Thugge.
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