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Central Bank of Kenya (CBK) governor Patrick Njoroge has expressed his frustrations about Kenya's inability to access the dollar debt market due to the rate hike.
Njoroge said the challenge could create a 'potential accident' in the financial market.
His warning came after Kenya was unable to float Eurobond in early 2022 amid costly borrowing, with investors demanding rates of up to 22% to lend Nairobi.
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The rate has increased globally, with the United States (US) ratifying a 75-point hike, further pushing up the cost of borrowing.
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The CBK boss revealed Kenya had been frozen out from the dollar debt market, meaning it faces a big challenge in taking new loans to settle maturing debts.
Alternatively, the country may be forced to borrow expensive loans.
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On Monday, September 19, Njoroge sounded the alarm on Kenya's high public debt.
He warned that continued borrowing to plug the budget deficit was unsustainable.
During induction at Safari Park Hotel, Nairobi, the governor asked newly elected members of parliament (MPs) to help manage the high public debt.
President William Ruto's government inherited a KSh 8.6 trillion debt from the Jubilee administration.
In the 2022/2023 financial year, Kenya will spend a whopping KSh 1.36 trillion to repay the debt out of the KSh 2.03 trillion the Kenya Revenue Authority is projected to collect.
Ruto hopes to expand the tax base after talks with KRA to enable the country to live within its means.
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Source: TUKO.co.ke
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