Central Bank of Kenya (CBK) governor, Patrick Njoroge, has sounded a warning bell disclosing that Kenya is on its last legs in terms of ability to sustain the current debt.
Speaking during a Monetary Policy Committee conference in Nairobi on Tuesday, Njoroge asserted that the country was at risk of defaulting on its loans.
He went on to urge the government to act immediately so as to take control of the situation before it spiralled downwards even further.
“It is important to say that the moment for dealing with debt reorganisation, looking at debt and itself re-organising is now,” Njoroge remarked.
The Government's chief banker also revealed that the current debt portfolio stood at Ksh5.5 trillion.
This represents a debt service revenue ratio of 33.4 per cent, several points above the global recommended global average of 30 per cent.
The CBK further noted that the maturing debts the National Treasury has to retire before the end of the current financial year next month include; Ksh78.7 billion Standard Chartered syndicated loan; the debut Eurobond of Ksh78.3 billion; Exim Bank of China Ksh8.3 billion, France Ksh7.6 billion and China Development Bank Ksh1.7 billion.
Institute of Economic Affairs (IEA) Managing Director, Kwame Owino, who was also present at the event echoed the governor's sentiments, adding that Kenya's current debt servicing ratio was unsustainable in the long run.
“As it stands now, out of every Ksh 100 collected by the Kenya Revenue Authority Ksh 30 goes into servicing the country’s public debt,” Owino exclaimed.
Analysts have continuously warned Treasury that rapid accumulation of public debt in the past six years will put Kenya’s economy at risk having crossed the Ksh5 trillion mark for the first time in June 2018.
