Kenya’s public debt jumped to 360 billion shillings in seven months to February according to official data.
The Central Bank weekly report says public debt now stands at 5.4 trillion shillings from 5.04 trillion shillings.
The debt now equals 56 percent of Kenya’s total wealth. China remains the largest external lender to Kenya while commercial banks accounts for more than half of the total domestic debt.
Government Debt to GDP in Kenya averaged 54 percent from 1998 until 2017, reaching an all-time high of 78.30 percent in 2000 and a record low of 38.20 percent in 2012.
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However, an increase in capital expenditure on a number of various projects has seen debt levels jump to 5.4 trillion shillings which has raised concerns over its repayment.
The debt is a combination of both external and internal borrowing with analyst blaming the government for crowding out private borrowers in the domestic market.
This is reflected by the fact that government securities registered a growth of 8 percent year-on-year last year as opposed to typical loans that grew by 2.2 percent.
The situation has been exacerbated by returns on government bonds and bills which average around 12 percent while capping interest rates at 13.5.
Latest data from the Central Bank of Kenya indicates that domestic debt stands at 2.7 trillion shillings while external debt sits at 2.71 trillion shillings.
However external debt is expected to spike later this month as Kenya is expected to sign another commercial loan with Chinese lenders for the construction of the standard gauge railway line to Kisumu.