Kenya is not under debt distress and has the legroom to borrow more, Treasury CS Ukur Yatani (pictured) has said.
This comes as the Government readies to borrow Sh1 trillion this financial year, pushing Kenya's debt stock to Sh7.7 trillion. "Kenya's debt is sustainable, we are not feeling any distress.”
“With revenue falling behind our projections and given the challenges of Covid-19 … as a responsible country we have the leeway to borrow and Kenya has never defaulted on any loan in history,” he said yesterday during a grant aid signing ceremony with Japan.
According to Yatani, Kenya is working “prudently” within the “confines” of its fiscal framework that will see the country strengthen its own revenue base that can finance development projects.
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Yatani also said that for over a year now, Kenya was borrowing concessional loans from friendly bilateral countries and other institutions where interest rates were lower and payment periods longer even up to 30 years.
“For over a year now Kenya has not borrowed a commercial loan. We know the danger; the high interests rates, shorter maturity and the pressure on our exchequer to service it,” he said.
Global ratings agency Moody’s is the latest rating company to raise alarm on Kenya's increasing debt, warning that the country might plunge into a financial crisis due to its rising debt load.
Yatani was speaking yesterday after the signing of the Exchange of Notes for the grant aid from Japan for a Sh1.9 power distribution project in Nakuru and Mombasa counties.
"This project will improve the distribution of the power transmission system to provide reliable and stable electricity, which will be beneficial to the households around Nakuru and Mombasa counties that were not on the grid,” Japanese ambassador to Kenya Ryoichi Horie said.