Kenya is set to repay Ksh.161 billion in debt by October, primarily from Eurobond and syndicated loans. A significant portion, Ksh.116 billion, is to be paid in installments until May 2027. The growing debt, with high-interest rates, poses economic challenges, necessitating swift action to prevent default.
Kenya is projected to pay a substantial Ksh.161 billion debt by October, as reported by Cabinet Secretary Mbadi during an interview on Spice FM. This debt comprises mainly of Eurobond and syndicated loans. Specifically, Ksh.116 billion related to the Eurobond is scheduled to be repaid in three equal installments of Ksh.38.8 billion annually until May 2027.
In addition to the Eurobond, Kenya faces a debt of Ksh.952 million from syndicated loans that is due within eight months. These commercial loans are sourced from financial institutions directly engaged with the Kenyan government. In September alone, total payments amounting to Ksh.123 billion are due, including Ksh.25.8 billion owed to the Trade and Development Bank, Ksh.10 billion, Ksh.83.5 billion, and an additional Ksh.3.4 billion.
The Cabinet Secretary emphasized the pressing nature of these obligations, stating, “This is besides the Eurobond (Ksh.38 billion needed in 2025). That is the kind of pressure we’re in.” It was noted that Kenya’s debt portfolio features a nearly equal ratio of domestic and foreign debt, with Ksh.5.6 trillion in domestic borrowing compared to Ksh.5.1 trillion in foreign debt. The government aims to maintain this 50:50 balance to shield taxpayers from volatility in interest rates.
The urgent need to address Kenya’s mounting debt has plagued both past and current administrations, stunting the nation’s economic growth and stability. Kenya’s debt strategy involves three principal types: multilateral, bilateral, and commercial. Multilateral debts come from global financial institutions like the World Bank and IMF, generally considered manageable for nations in debt distress.
Conversely, bilateral debts arise from agreements with other sovereign states while commercial debts, such as Eurobond and syndicated loans, are secured from lenders at higher interest rates, increasing the pressure to ensure timely repayments and avoid default.
In summary, the Kenyan government is under significant stress to manage a Ksh.161 billion debt due by October, largely stemming from Eurobond and syndicated loans. The structure of this debt is pivotal, with repayments due over several years while the government strives to maintain a balanced ratio of domestic and foreign borrowing to mitigate interest rate fluctuations. Immediate action is required to avert default and stabilize the country’s economy.
Original Source: www.citizen.digital
