Kenya’s public debt which stood at Ksh 5.1 trillion mark by September 2018 will now be pushed beyond Sh5.5 trillion by close of the year after the world bank approved the Sh75 billion loan requested by Kenya.
The loan described as “Inclusive Growth and Fiscal Management Development Policy Financing” will top up the 2019/2020 budget on the government’s Big Four Agenda that includes universal healthcare, affordable housing, food security, and manufacturing.
World bank said the loan will facilitate and support critical reforms that will enhance competition and market transparency, reduce corruption opportunities in agriculture, and help Kenyan farmers to achieve higher productivity and increase their incomes.
Kenyans are however sceptical that the loan may not achieve the above agendas.
For decades, the World Bank has never put cash straight into the National Treasury until they did recently on this which will be used at the discretion of the government.
The loan was approved at a time when central bank governor Dr. Patrick Njoroge warned that the country has reached its debt limit.
By hitting the Ksh.5.5 trillion mark which were already at as a country, this represents a debt service ratio of 33.4% instead of the recommended global average of 30%.
Just this month, Kenya successfully issued a third Eurobond priced at Ksh.210 billion (USD 2.1 billion) despite rising concern over its ability to service its debt burden.
During an interview with the newsrooms a while back, Henry Rotich said that the 2019 Budget Policy Statement and 2019 Medium Term Debt Strategy outlined the strategy for maintaining a sustainable debt position, which we refer to as fiscal consolidation.