The World Bank has raised an alarm that Kenyans may soon suffer a negative effect due to the ever increasing foreign debt.
In a report, the international lender revealed that the country was ill-prepared to service its debt amounting to Kshs2.7 billion.
The report further warned that the debt would then force the Central Bank of Kenya to take up half of its dollar reserves.
The depletion of the dollar reserves, therefore, subsequently leads to a country’s inability to import critical products such as petroleum hence paralysing the economy.
The debt cited is nearly maturing and entailed a portion from a syndicate of banks and the other from the Eurobond.
“In the future, higher debt service payments, in part due to bullet repayments falling due on maturing international bond issues, coupled with rising global interest rates… exacerbating concerns about debt sustainability,” stated the report.
The report also targeted four other African countries including Cote d’Ivoire, Ethiopia, Gambia and Zambia whose loan repayments had exceeded 15 per cent of their exports.
Economic indicators of Kenya’s foreign loan repayment status were already nosediving.
World Bank revealed that the country’s annual exports, which were the main source of dollars, had reduced and covered less than a third of the foreign debt.
The lender also showed that Kenya was looking for another Eurobond revealing that the country would then be at a high risk of defaulting on its loans.
