RACE AGAINST TIME

Kenya to pay Sh235 billion in debt by June, Treasury

The country has managed to pay Sh635.3 billion in past 10 months against Sh870.6 billion set in the budget.

In Summary

• Treasury will now have to pay an average of Sh117 billion per month for the remaining months, almost double Sh63.5 billion it has been paying since July.

Treasury buildings.
Treasury buildings.
Image: MONICAH MWANGI

Kenya is behind on its debt repayment for the current financial by over Sh200 billion, latest National Treasury revenue data shows. 

The Statement of Actuarial Revenues and Net Exchequer Issues as at April 30 published shows that the country has managed to pay Sh635.3 billion in past 10 months against Sh870.6 billion set in the budget.

This means, the Treasury will have to pay Sh235.3 billion in remaining two months, exerting more pressure on the country’s debt sustainability.

 

Treasury will now have to pay an average of Sh117 billion per month for the remaining months, almost double Sh63.5 billion it has been paying since July.

The pressure to clear this year’s debt is comes at a time when the country has just concluded fundraising in the international market for the third sovereign bond, part of which will be use to clear past debts.

Last week, Kenya raised $2.1 billion (Sh210 billion) whose proceeds Treasury said will partly be used to repay the first Eurobond taken in 2014 and cater for pending budgetary needs.

Both local and international experts have in the past called out Kenya for its unsustainable debt, with global credit rating firm Moody’s downgrading the country’s credit score from stable to low in January.

Besides debt payment, President Uhuru Kenyatta’s government may not fully fund its development budget for the year, despite slashing it by at least Sh30 billion to Sh361.2 billion in September last year.

According to the statement, the exchequer has released Sh251.6 billion in past 10 months to April against Sh361.2 as set in the budget.

While the exchequer is racing against time to meet the country’s debt obligation, revenue collection is dwindling.

 

The statement published in the Kenya Gazette shows that the government had collected a total of Sh1.9 trilling as at end of April against Sh2.58 billion on slow domestic tax collection.

The country’s principal tax collector, Kenya Revenue Authority (KRA) had collected only Sh1.16 trillion by end of April against a revised target of Sh1.6 billion.

This means, the agency is required to collect a whopping Sh440 billion in next just two months to hit target compared to a monthly average of Sh116 billion in past 10 months.

It will now need to disburse at least Sh100 billion in May and June to hit the target compared to an average of Sh25 billion per month it has been releasing since the beginning of the financial year.

The slow pace in disbursement of development fund is likely to further stall ongoing projects.

In February, Treasury CS Henry Rotich told the parliament that government projects across the country worth Sh366 billion have stalled due to limited budget.