While former President Uhuru’s Kenyatta borrowed extensively, to the tune of over Ksh6.7 trillion, failure to spread the payment has seen Kenya struggle to pay over Ksh1.3 trillion in the 2023/2024 financial year.
This disclosure was made by President William Ruto during an interview with Japan’s Nikkei publication, on February 9, with the Head of State justifying why Kenya had now to borrow to offset its loans.
Ruto responded to questions touching on how Kenya would navigate repayment of loans from China amounting to USD6 billion (Ksh951 billion) with the majority of the debt maturing in 2024.
Additionally, the repayment of loans from China coincides with the maturity of the Ksh321 billion Eurobond buyback floated in 2014 during Uhuru’s tenure.
Ruto emphasised that Kenya would broaden its development financing avenues to prevent similar miscalculations from occurring in the future.
This would be beneficial in that repayments would not fall simultaneously and would not solely be made in dollars leading to the weakening of the shilling.
President Ruto kickstarted this process on December 7, when he pushed for India to extend a Ksh38 billion loan to Kenya in Indian Rupees rather than in dollars.
While in Japan, the President also signed a Memorandum of Understanding with Nippon Export and Investment Insurance (NEXI) for the issuance of a Samurai Bond worth Ksh80 billion, which is yen-dominated.
Repayment of the Ksh1.3 trillion loans
In December 2023, Ruto’s government repaid Ksh10.8 billion as interest on the USD2 billion Eurobond loan secured in 2014.
Less than two months later, Kenya formally started buying back the Eurobond issued in 2014 during Uhuru’s tenure.
On January 19, the National Treasury admitted that Kenya had paid over Ksh72 billion to China concerning Standard Gauge Railway (SGR) and other infrastructure loans.
Noteworthy, Kenya has yet to default on any international loan under Ruto’s tenure with the President assuring investors that he will honour all its debt obligations.
To be able to repay the loans, Kenya resorted to borrowing extensively from international financial institutions as well as increasing taxation. Kenyans have continuously opposed both fiscal measures, with the latter causing Ruto to lose his popularity.
"We have excellent relations with the World Bank. We have excellent relations with the International Monetary Fund. We have excellent relations with many other countries that support our development,” Ruto remarked.
Kenya has borrowed over Ksh2.4 trillion since September 2022, with the majority of the advanced sum used to repay loans maturing in the 2023/2024 financial year.
