Bilateral Debt-Service Costs Rise By 82 Percent On End Of Payments Pause

 

By Kepha Muiruri

Kenya’s bilateral debt service cost shot up by 82 percent to Ksh.101.9 billion in 12 months to June 2022 from Ksh.56 billion previously.

This is according to new data from the National Treasury Annual Public Debt Management Report which attributes the rise in the repayments to bilateral creditors or partner countries to the end of Kenya’s participation in the debt service suspension initiative (DSSI).

The DSSI program run between June 2020 and December 2021 but Kenya only participated in the second phase of the initiative from January this year.

In previous disclosures, the exchequer revealed that Kenya saved Ksh.61.2 billion ($503.8) million from its participation in the debt service suspension which covers part of the country’s bilateral creditors.

Savings from the DSSI program narrowed in the final leg -- June to December -- as non-Paris club creditors such as China pulled their support for the initiative which had been spearheaded by G20 countries alongside multilateral lenders including the IMF and the World Bank.

Subsequent to the end of DSSI, Kenya’s total debt service costs were higher in the year ended June 2022 at Ksh.305.7 billion from Ksh.234.6 billion previously.

The bilateral payments represented about one-third of the total debt service costs as commercial repayments ate up nearly half of the arrears paid at Ksh.151.8 billion.

Multilateral debt service costs took away the smallest share of the reimbursements in the period at 16.8 percent.

In contrast, domestic interest payments in a similar 12-month period were higher at Ksh.456.8 billion with payments to holders of Treasury bonds consuming the lion’s share of payments at Ksh.389.8 billion.