Heed warning on rising external debt

There appears to be no end to bad news on the economic front. After months of declining business precipitated by the political impasse over the presidential elections, the interest on arrears for the country’s long-term debt has risen sharply setting alarm bells ringing about the Treasury’s capacity to meet its repayment obligations.

According to data from the World Bank, interest on these arrears rose by 33 per cent from 2015 to 2016, a departure from previous years when interest repayments were kept under control. As a result, the interest on long term debt arrears has risen to Sh11.9 billion, meaning the country may be forced to renegotiate its debt repayment schedule with financiers to minimise risk of default.