Kenya’s debt accrues to Sh304b since 2003

By Steve Mkawale

The Government has incurred a total of Sh304.4billion in external debt over the last eight years, a cabinet minister revealed to parliament Wednesday.

Finance Minister Njeru Githae said the amount was obtained from a number of creditors, including the World Bank, International Monetary Fund (IMF) and the Government of Japan.

Mr Githae, however, assured the House that the total public debt is manageable as it currently stands at 47 per cent of the Gross Domestic Product (GDP).

“Our debt situation is manageable and sustainable, if it goes beyond 50 per cent of the GDP, then it will become unsustainable. The Government has not been engaged in any reckless borrowing. The budget deficit currently stands at 6 per cent,” he said.

He further assured members that the repayment of the loans will not affect the envisaged county governments as it is charged on the Consolidated Fund ruling out any possibilities of the country experiencing a situation like that in the Euro Zone countries.

"We only have one government. Counties are just entities and will have nothing to do with the national debts already incurred. But in future, each county will have to repay any external debts they incur, the government will only guarantee the loans," said the minister.

He was responding to questions by MPs over the national debt incurred by the Government since 2003 and how the State would repay such debts.

Wajir South MP Mahamed Sirat had asked the minister to provide details of the projects that were funded using the loans, indicating their respective costs.

Githae confirmed that the funded projects using donor funds were prioritised in line with the country’s development agenda arguing that they were distributed evenly across Kenya.

The minister tabled a schedule of loans contracted by the government of Kenya from January 2003 to end of October 2011 indicating the projects funded the creditor and borrower of the loans and how outstanding debt was disbursed.

The schedule contains national projects that have since been funded through loans from organisations such as International Fund for Agriculture, International Development Association, African Development Fund, GTZ, Economic Development Cooperation Fund-Korea and European Investment Bank among others.