Kenyan taxpayers to bear Sh325 billion public debt maturing in 2015

National Treasury Cabinet Secretary Henry Rotich released consolidated fund service that caters for debt services. [PHOTO: FILE/STANDARD]

By JAMES ANYANZWA

NAIROBI, KENYA: Taxpayers are set to shoulder burden of servicing the country’s growing public debt to the tune of Sh324.92 billion in the next financial year.

According to the National Treasury, a total of Sh122.92 billion and Sh24.51 billion will be used to finance interest payments on internal and external debts respectively during the fiscal year starting on July 1.

An additional Sh177.47 billion will be used for repaying internal and external debts, which would have matured in the 2014/2015 financial year.

Of this amount, a total of Sh150 billion will be used for redeeming internal debts, which arise when the government borrows by issuing treasury bills and bonds, while Sh27.47 billion will be spent on paying off external debts.

CONSOLIDATED FUND

The payments are part of the charge on the Consolidated Fund Service (CFS), which was allocated Sh362.5 billion during this year’s budget to cater for among others, debt repayments and pensions for the public officers.

According to Central Bank, bonds valued at Sh78.77 billion and Sh152.99 billion are due for retirement in 2014 and 2015 respectively.

The National Treasury is also considering issuing $2 billion sovereign bond to fund the country’s infrastructural projects.

Part of the proceeds of the bond will also be used to repay a syndicated loan for a two-year $600 million credit secured from Citi Bank (London), Standard Bank (South Africa) and Standard Chartered Bank (London) that is repayable in mid this year.

According to the 2014/2015 Budget Estimates, the Government targets revenue collections, including appropriations-in-aid of Sh1.18 trillion to fund part of the mega Sh1.8 trillion 2014/15 Budget.

The overall deficit (including grants) is projected to be about Sh342.6 billion.

The budgetary shortfall is to be bridged through next external financing (Sh149.8 billion) and net domestic borrowing (Sh190.8 billion).

Kenya’s total public debt has risen from Sh750 billion in June 2005 to Sh1.91 trillion by June 30, 2013.

Domestic debt and external debts rose from Sh315.57 billion and Sh434.45 billion to Sh1.06 trillion and Sh852.6 billion in a similar period, respectively.

According to the National Treasury the share of domestic debt has been higher due to unreliable external debt flows and cited that the cost of servicing these debts are worrying.The amount of money the Government spends yearly on repaying loans has risen from Sh49.55 billion in June 2004 to Sh137.63 billion in June 2013.

SCHEDULED LOANS

This is mainly as a result of an increase in the level of debt stock as well as repayment of previous rescheduled loans.

The National Treasury’s monthly debt bulletin indicates that the level of public and publicly guaranteed debt stood at Sh2.12 trillion or 50.9 per cent of the Gross Domestic Product (GDP), as at the end of January this year.

The increase, which is 0.46 per cent at the end of December 2013 position, is mainly attributed to increase in domestic debt.