The National Treasury has published Kenya's outstanding debt portfolio and loan repayments made by the government as of March 2024.
In its monthly publication, the Treasury indicated that Kenya's outstanding debt stood at Ksh10.39 trillion. This was broken down to Ksh5.235 trillion for domestic debt and Ksh5.163 trillion for external debt.
A key highlight revealed in the report was that Kenya's domestic debt increased by Ksh34 billion while the external debt dropped by Ksh490 billion.
External Debt
The Ksh490 billion drop in the external debt was attributed to the strengthening of the shilling as was witnessed between February and March this year.
"Debt owed to bilateral creditors decreased by Ksh116.49 billion and multilateral debt by Ksh244.60 billion. Commercial debt decreased by Ksh118.80 while publicly guaranteed external debt decreased by Ksh10.58 billion," read the report in part.
Therefore, as of March 31, Kenya's external debt portfolio dropped from Ksh5.65 trillion to Ksh5.163.
Meanwhile, concerning external loan repayments, the Treasury noted that the government had paid back loans amounting to Ksh633.19 billion for the 2023/2024 Financial Year as of the end of March.
"The actual cumulative external debt service as of the end of March 2024 was Ksh633.19 billion against the financial year target of Ksh780.79 billion.
"External debt service during the month of March 2024 was Ksh32.22 billion, comprising principal repayments and interest payments of Ksh14.57 billion and Ksh17.65 billion respectively," read the report in part.
Domestic Debt
Unlike external debt, domestic debt is reported to have increased in March this year. This is attributed to additional borrowing that was done in March.
The domestic debt stock increased by Ksh34.98 billion in March. Therefore, with this borrowing, the external debt portfolio increased from Ksh5.2 trillion at the end of February 2024 to Ksh5.23 trillion at the end of March 2024.
"The net domestic financing as at the end of March 2024 was Ksh418.33 billion against an annual target of Ksh605.74 billion for FY 2023/24," read the statement in part.
What This Means
Kenya's external portfolio is expected to continue decreasing should the shilling continue to strengthen against the dollar and other major currencies. Currently, the dollar is trading at Ksh128.
"The proportion of external debt denominated in USD, Euro, Yen, Yuan and Sterling Pound were at 67.9 per cent, 21.3 per cent, 3.6 per cent, 4.8 per cent and 2.1 per cent respectively.
"The Government is currently exercising currency diversification with an aim of mitigating the exchange rate risk on external debt," read the report in part.
However, the fall may be hampered owing to the expected shortfall in the 2024/2025 budget that the withdrawal of the Finance Bill has occasioned.
Owing to the deficit the government will be forced to cut on expenditures and borrow more. Ultimately, this will continue to pose risks to Kenya's ability to meet its debt obligations.
