National Treasury Cabinet Secretary Henry Rotich Thursday downplayed the magnitude of Kenya's rising debt burden despite growing concerns at home and abroad.
Central Bank of Kenya, the custodian of Kenya’s debtdata, has failed to update the level of debt on its website over the last two months in what is seen as an attempt to veil the level of debt, which has officially crossed the Sh5 trillion mark.
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Thursday, the CS appeared to brush off the magnitude of the country's debt crisis, instead saying the Government plans to slow down on borrowing through lower budget gaps, salary reviews and managing new public development projects through a new unit at Treasury.
“We have established a Public Investment and Management Unit at the National Treasury to improve the management and budgeting of public development projects. This unit will ensure that all the projects in the budget are appraised before they are committed,” said Mr Rotich in his budget speech.
He said the country would only have to borrow Sh558.9 billion, of which Sh287 billion would be sourced from foreign lenders while Sh271 billion would be borrowed locally.
Kenya is under piling pressure to meet principal payments amounting to Sh470 billion, including two syndicated loans and a Eurobond.
In his budget highlights, Mr Rotich cited project loans of Sh235.8 billion, commercial financing (Sh298.9 billion), programme support (Sh2.5 billion), foreign payments (Sh250.3 billion) and net domestic financing (Sh271.9 billion) in his schedule to meet the budget shortfall.
He reckoned that Treasury would be able to convince investors not to take back their money but roll the debtsover so that the country does not have to borrow more money to refinance the existing debts because if creditors come calling, it would mean borrowing up to Sh1 trillion this year alone.
Analysts, however, did not sound convinced. “Part of the reason why we are not borrowing Sh1 trillion is that part of our expenditure under debt will not be paid out in cash. I am not sure how much of the Sh470 billion under debtredemption will be paid and how much will be rolled over,” said John Kinuthia Lead Research Analyst, International Budget Partnership.
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However, owing to the experience last October when Kenya approached syndicated loan investors for a rollover and they declined, Rotich was forced to resort to a refinancing package with Trade Development Bank, which bought part of the maturing Sh75 billion debt and stretched payments to seven years.
Bloomberg Economist Mark Bohlund said Kenya was likely to tap into the Eurobond market for the second time this year to meet the international obligations. It is likely that the 2019 Eurobond will be refinanced through another international bond issues, although other options are available.