Kenya’s public debt is projected to hit Sh2.22
trillion or 53 per cent of the value of the economy by the end of June,
the Treasury has said.
This is about Sh100 billion more than the current
stock of Sh2.1 trillion, comprising Sh888 billion foreign and Sh1.21
billion domestic debt.
Treasury secretary Henry Rotich said in the debt
management strategy paper for 2014 that the government plans to borrow
more from foreign lenders as opposed to the domestic market to reduce
the refinancing risk.
“On domestic borrowing, the government will seek
to issue medium to long term debt securities to lengthen the maturity
structure of the debt, and thus reducing the underlying refinancing
risk.
“The uptake of domestic debt will be reduced to cut on rises in interest costs and the rapid growth of the debt stock.
“This action is consistent with the strategy to
shift portfolio towards external debt dominance and also safeguard debt
sustainability over the medium term,” says Mr Rotich.
External loans are ordinarily borrowed on highly
concessional terms with minimal interest rate costs and with grace
repayment period of about 0.7 per cent and 8.3 years respectively.
The Treasury said that it would also minimise the
degree of foreign exchange rate risk associated with the external debt
portfolio by borrowing more concessional debt while maintaining a
limited window for borrowing on commercial terms to cut costs and
refinancing risks.
“Going forward, the composition of the debt
portfolio suggests that reducing refinancing risk should remain a
priority for the 2014 Medium Term Debt Management Strategy,” he added.
In the debt management strategy paper tabled in
Parliament by the Leader of Majority Adan Duale, Mr Rotich said that the
structure of the debt portfolio is projected to be Sh1.23 trillion (52
per cent) domestic debt and Sh995.8 billion or 48 per cent external by
end of this financial year.
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