Kenya still faces a significant risk of debt distress despite a Ksh218.53 billion ($1.5 billion) new Eurobond issue that helped to calm foreign investor jitters over the possibility of the country defaulting on the repayment of its debut $2 billion (Ksh291.38billion) Eurobond that is maturing in June…
The Parliamentary Budget Office (PBO) said the economy is still in danger of a liquidity crisis with its key debt sustainability indicators, including debt service-to-revenue ratio and debt-to-gross domestic product (GDP) ratio headed south, This is amid falling revenue collections and surging debt repayment costs, Moreover, a significant risk of debt distress persists, primarily arising from liquidity risks, while debt dynamics remain susceptible to fluctuations in exports, exchange rates, fiscal conditions, and natural disasters,” the PBO said.
“Moreover, the escalating cost of debt poses a substantial challenge for the repayment of both external and domestic obligations. As the repayment burden increases, the country faces potential funding constraints, emphasising the need for strategic measures to mitigate these challenges and ensure sustainable financial stability.”
Kenya’s public debt increased by Ksh1.93 trillion ($13.3 billion) to Ksh11.14 trillion ($76.6 billion) last year from Ksh9.2 trillion ($63.2 billion) in 2022, The total debt service amounts stand at 58.8 percent of revenues, leaving only 41.2 percent of tax revenue to finance government development programmes.
