Taxpayers should prepare for a tough 2019 as government starts paying huge maturing debts amid low revenue collection.
Among debts lined up for repayment includes $2.8 billion (Sh280 billion) debut Eurobond that Kenya issued in June 2014 to retire a $600 million (Sh61.2 billion) syndicated loan taken in 2012.
The loan from international commercial lenders was due in August that year. The balance was to be pumped into infrastructure development.
Kenya borrowed $2 billion (Sh202 billion) from international investors in June 2014 comprising a five-year issue of $500 million (Sh50.50 billion) at an interest of 5.875 per cent and $1.5 billion (Sh151.50 billion) for 6.875 per cent to be repaid in 10 years.
It went back to the market in December of the same year for a further $750 million under similar terms, a transaction technically known as tap sale, in which $250 million went into the five-year tranche.
In June, National Treasury CS Henry Rotich budgeted for $750 million (Sh76.5. billion) to repay the first tranche of the debut Eurobond bond, which matures in mid-June, attracting an interest of Sh22.95 billion towards interest servicing of the entire facility.
However, there has been disputed opinion on how the government spent proceeds from the sovereign bond, with the Auditor General Edward Ouko saying that Sh215 billion of the Sh280 billion could not be clearly accounted for.
Local leaders and economic experts including opposition Chief Raila Odinga have also questioned how the money was used.
Treasury has however maintained that the money was used diligently for intended purposes.
The first external debt to mature this year will however be the $800 million syndicated loan that Kenya obtained from four international commercial lenders including Standard Chartered, Standard Bank, Citi and Rand Merchant Bank in March 2017.
This was part of Kenya’s planned $1.5 billion (Sh153 billion) syndicated loan partly to plug a fiscal deficit equal to 9.7 percent of gross domestic product in its budget for the fiscal year to June 2017.
The facility which had a two year maturity will expire in March attracting up to eight percent interest per year.
This means that Kenya will have to remit the total principal of Sh81.6 billion and accumulated interest of Sh13 billion.
Others due before June include $214 million (Sh21.8 billion) bilateral loans from China, Japan and France.