Kenya will not default on its current debt of about Sh9 trillion despite being rated among countries with a high risk of not repaying borrowed money, investment firm ICEA Lion now says.
It says the country has put in various measures towards debt servicing that will be backed by the projected economic growth in the first three months of this year.
“Kenya faces considerable debt servicing pressures as a result of a higher debt burden. However, its debt metrics are far better than those of debt defaulting countries such as Ghana and Namibia and Zambia,” the firm says in a report.
The country’s debt currently amounts to Sh8.89 trillion, according to the latest data by the Central Bank of Kenya (CBK).
“As long as the government maintains measures to reduce the budget deficit and cut in additional borrowing, the country will be able to manage its debt burden in the near to medium term,”ICEA Lion says in its report.
The debt amid high recurrent expenditure has since triggered the government to put in austerity measures, such as the Sh300 billion budget cut.
It is also pushing for higher revenue collection to service debt.
Central Bank of Kenya (CBK’s) governor Patrick Njoroge has also said the country has been managing its debt situation “quite effectively” in the post Covid-19 error.
He was speaking during an interview on the sideline of the World Economic Forum, in Davos.
“In the run up to the Covid-19 crisis, the country was poised to start bringing down the debt levels which led to much of multilateral borrowing but also, more of concessional borrowing to address the Covid crises and in turn pushed further the debt levels,” Njoroge said.
He however noted that debt levels have began going down on the back of various programmes, including the IMF supported programme that is intended to bring down the country’s debt at sustainable levels.
The program saw the country receive Sh52.8 billion in the latest disbursement, in December last year.
This was after the IMF staff reached a staff-level agreement to disburse the funds, which are part of a $2.34 billion loan approved in May last year.
The programme also seeks to advance the broader reform and governance agenda by addressing weaknesses in state-owned enterprises (SOEs), and strengthening the country’s anti-corruption framework.
It further seeks to strengthen the monetary policy framework and support financial stability.
Kenya is ranked together with Cameroon, Egypt, Nigeria and Rwanda as countries with high risk of debt defaulting.
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