Kenya's total debt surged by close to a trillion in the six-month period to June 30, 2023 due to the shilling's depreciation against all major international.
Latest National Treasury data shows that the country's debt rose by Sh883.5 billion to hit Sh10.3 trillion in the review period after the local currency depreciated at an average of 20 per cent against five top global currencies.
The exchequer says that the country's gross external debt, which stood at Sh4.3 trillion on June 22, 2022 rose to Sh5.4 trillion on June 23 this year.
A report on the effects of Kenya Shilling depreciation on public debt shows it dropped from 117.8 units to 140.3 against the dollar in a year to June, having shed 19.3 per cent in value.
Yesterday, the shilling hit a new low of 151 units against the greenback, further pushing up the country's external debt obligation.
It lost 24.3 per cent in value against the Euro to trade at 153 from 124 units. It lost with similar margins against the Sterling Pound to hit 177.3 units.
Furthermore, it lost 10.7 per cent in value against Japanese Yen and 1.8 per cent against Chinese Yuan.
Most of Kenya's external debt which accounts for 51 per cent of the country's total public debt is denominated in US dollars, with the latest data from the National Treasury showing that it accounts for 71 per cent of external debt.
Other currencies including Euro, the Japanese Yen, the Chinese Yuan, and the Sterling Pound hold debt to 18 per cent, 6.6 per cent, 5.4 per cent and 2.5 per cent, respectively.
According to the exchequer's public debt management report, loans acquired in the US currency has grown from 42.3 per cent in 2014 on account of commercial debts and sovereign bonds.
When he took over the country's leadership in September last year, President William Ruto vowed to significantly cut on external borrowing, terming it too expensive.
Even so, debt data from the National Treasury shows the country took a total of 18 external loans in the financial year ended June 30,2023, amounting to Sh346 billion.
A half of these loans were taken during Ruto's tenure.
Four of the loans were tapped from the World Bank's International Development Association including Sh16.39 billion for the Eastern Africa Regional Statistics Programme for Results and Sh18.61 billion for the Horn of Africa-Groundwater Resilience Project.
The other two loans Sh25.99 billion and Sh44.26 billion were part of the World Bank's Fiscal Sustainability and Inclusive Green Growth Development Policy Operation.
The Treasury also borrowed Sh13.61 billion from the African Development Bank (AfDB) for the Competitiveness and Economic Recovery Support Programme and Sh4.2 billion for support to the micro small and medium enterprises sector programme from the Khalifa Fund for Enterprise Development.
One of the four commercial loans the country took was a Sh42.15 billion-syndicated short-term multi-currency facility for budgetary support from the Trade and Development Bank and a Sh2.96 billion commercial loan from Mizubo Bank Europe N.V.
The depreciating shilling has forced the government to revise its repayment plan upwards.
For instance, the inaugural Eurobond of $2 billion taken in 2014 will now attract an extra Sh70 billion due to weak shilling.
Data from the National Treasury shows the country will pay Sh311.6 billion to clear the initial Eurobond in July, up from the initial Sh240 billion.
This is after Kenya revised its currency from Sh120.80 to Sh155.81 against the US dollar. The value of the shilling against the greenback has been dropping since 2020, hitting an all-time high of Sh151 by close of day.
Despite this, Kenya Kwanza government is planning to borrow Sh449 billion this financial year, almost Sh100 billion more compared to last year.
