Treasury Cabinet Secretary Ukur Yatani insists that Kenya’s public debt is still sustainable and there is still room for borrowing more.
Speaking on Friday, CS Yatani said this allows the government to borrow Sh1 trillion for the 2020/2021 financial year, which will push the country’s total domestic and foreign debt to Sh7.7 trillion.
“Kenya’s debt is sustainable, we are not feeling any distress. With revenue falling behind our projections and given the challenges of Covid-19 … as a responsible country, we have the leeway to borrow and Kenya has never defaulted on any loan in history,” said Yatani during the signing of a grant aid with Japan.
Yatani further refuted claims that Kenya is being charged high interest rates on loans it took in the recent past. He clarified that Kenya went for concessional loans due to low-interest rates and longer repayment periods as opposed to commercial loans, which are expensive.
“For over a year now Kenya has not borrowed a commercial loan. We know the danger; the high interest rates, shorter maturity, and the pressure on our exchequer to service it,” he said.
Although Kenya’s debt remains below International Monetary Fund (IMF) and World Bank debt sustainability assessment (DSA) threshold of 74 percent of GDP, there have been fears it could sink the country into a financial crisis.
Kenya’s public debt stood at Sh6.6 trillion in May this year but the figure is expected to rise once the funds the government borrowed to cushion the economy from the effects of the Covid-19 pandemic are factored in.