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Government spent Sh147 Billion to repay public debt in the first quarter

By Patrick Kibet | December 19th 2018

The Government paid Sh147 billion in public debts between July and September this year, which is double the amount paid last year.

According to a report by the Controller of Budget (COB), Treasury spent the Sh75 billion on repayment of public debt during the same period last year. The report underlines concerns over the country's ballooning public debt.

In the first three months of financial year 2018/19, the total exchequer issues to Consolidated Fund Services amounted to Sh166.9 billion.

In current the financial year, the Government plans to spend Sh870 billion on repayment of public debt, an increase from Sh621 billion allocated in 2017/18 financial year. This comprises of Sh400 billion towards interest payment and Sh470.6 billion for redemption.

The gross public debt, according to National Treasury Quarterly Review report, stood at Sh5 trillion as at last September 30, as compared to Sh4.5 trillion as at the same time last year.

The public debt comprised of 52 per cent external debt and 47 per cent domestic debt by end of last September.

According to the National Treasury, the increase in the public debt is attributed to external loan disbursements and the uptake of domestic debt during the first quarter of current financial year.

The parliamentary budget office, in its 2018/19 budget watch report, noted that the country’s debt service to revenue ratio breached the 30 per cent threshold in the 2017/18 financial year.

“While external debt sustainability indicators indicate that all ratios remain sustainable, public debt ratios indicate that the ratio of debt service to revenue has breached its threshold of 30 per cent in the FY 2017/18, is indicated to recover in FY 2018/19 but the threshold will remain breached until FY 2019/20”.

However, the report indicates that the level of debt in Kenya remains sustainable at 49 per cent against an IMF's threshold of 74 per cent.

This is based on Treasury's data from an IMF report dated February last year.

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