The National Treasury will include Ksh 3.4 trillion in its national debt, owing to the International Monetary Fund’s pressure on Public Debt Disclosure. This move will push Kenya’s national debt past the Ksh 9 trillion ceiling to Ksh 10.5 trillion. Currently, Kenya’s public borrowing stands at Ksh 7.1 trillion.
According to data from the Central bank of Kenya, the country’s public debt grew by Ksh 0.8 trillion to Ksh 7.1 Trillion between March 2020 and January 2021.
The IMF’s May 2020 DSA acknowledges that the Treasury will gradually undertake the process, starting with foreign currency-denominated lending to parastatals. The Treasury will later proceed to include loans from private-public partnerships, pensions and counties.
“The authorities noted the importance of expanding coverage to include counties, non-guaranteed debt contracted by the extra-budgetary units, and SOEs. They planned to take a gradual approach to monitoring contingent liabilities, for example, to start to monitor external borrowing by large SOEs,” reads the Joint World Bank-IMF Report.
Understated National Debt
Business Daily reports that the National Treasury only recognizes guaranteed borrowing, estimated at Ksh 139 billion. This excludes liabilities to parastatals of Ksh 1.494 trillion, Public-Private Partnerships at 679 billion, Kenya Depositors Insurance Corporation at Ksh 23 billion and Pensions at Ksh 819 billion.
Kenya’s public borrowing has raised multiple red flags with credit rating provider Fitch Ratings earlier warning that Kenya will have difficulties reining its deficit. The stance considers the mounting political pressure from the looming elections, ongoing Building Bridges Initiatives Debate, and political pressure to increase transfers to counties.