The government will borrow over Ksh700 billion from the local and international market to cater for the deficit in the 2024/2025 budget.
While appearing before the National Assembly Committee on Public Debt and Privatisation, Treasury Principal Secretary Chris Kiptoo revealed that Ksh356.4 billion would be borrowed from the external market.
Additionally, the government plans to raise Ksh399.9 billion from the domestic market through government securities (Treasury Bills and Bonds).
The PS noted that the country would be forced to borrow more in this financial year owing to the increase in the budget deficit.
According to the PS, the withdrawal of the Finance Bill 2024 and the revision of the budget estimates forced the budget deficit to increase.
"The PS told the members that following the rationalisation of the approved budget as directed by the President following the non-assent of the Finance Bill 2024, the overall fiscal deficit increased from Ksh 597billion in the approved budget to Ksh761billion in Supplementary Estimates I.
"Explaining further, Dr Kiptoo stated that it implies that net domestic borrowing through government securities will increase to Ksh399.9 billion which is 2.2 per cent of GDP in Supplementary Estimates I, up from Kshs 258.5 billion, 1.4 per cent of GDP, in the approved budget," read the Committee's statement in part.
Likewise, external borrowing will increase to Ksh356.4 billion from Ksh333.8 billion which was approved in the initial budget.
Further, the PS addressed Kenya's current debt standing which stood at over Ksh10.5 trillion in June 2024.
The majority of the debt is owed to domestic lenders including banks.
Kiptoo noted that the overall outstanding debt of Ksh10.5 trillion was a decline from the figures recorded in December 2023.
“Public and publicly guaranteed debt comprise Ksh5.150 trillion which is 48.8 per cent of total debt in external debt mostly owed to multi-lateral creditors on highly concessional terms while Ksh5.410 trillion which is 51.2 per cent of total debt is domestic debt largely held in Treasury Bonds,” he stated.
