New disclosures by the National Treasury show that Kenya’s debt repayment reached Sh600.73 billion in the period to December 2023.
This meant that despite a rise in revenue collection, Kenyans had little to smile about as debt gobbled up 57 percent of the Sh1.05 trillion tax revenues.
This left the government with only 43 percent of the revenue generated, for development, salaries and running of public services.
The statement of actual revenues & net exchequer issues as of 31st Dec 2023 shows that Kenyans should tighten their belts this year, as the administration Kenya Kwanza administration has signalled higher repayments this year as a result of the shilling devaluation.
The exchequer has revised upwards this year’s total public debt obligation to Sh1.866 trillion from the initial estimate of Sh1.75 trillion.
In the period under review, a majority of the exchequer allocations from the Consolidated Fund were channelled to servicing public debt, accounting for 89.9 percent of the total expenditure.
Pension disbursements totalled Sh59 billion, while Sh8.3 billion was allocated for the payment of salaries and allowances to public servants.
However, a plan by the state to secure external financing to clear part of the Maturing Eurobond debt could ease the debt pain.
“So we expect that by February when the World Bank board will sit down the country will have all that is required and then in the next three years we have over 12 billion dollars (Sh1.84 trillion) available for us in through concessional window of the World Bank,” National Treasury principal secretary Chris Kiptoo told MPs last month.
Kenya has in recent months been grappling with acute liquidity challenges caused by uncertainty over its ability to access funding from financial markets before a $2 billion (Sh306.7 billion) Eurobond matures next June.
The current huge usage of taxes on debt repayment occurred despite Kenya not being even midway through the total Sh1.866 trillion debts, that the Treasury is expected to settle within the current budget cycle ending in June 2024.
This is inclusive a $2 billion (Sh300 billion) Eurobond repayment.
The Sh150 billion loan to Kenya by the International Monetary Fund (IMF) inspired confidence among international investors, leading to a drop in yields for the country's Eurobond due June 24.
The latest weekly bulletin by the Central Bank of Kenya (CBK) shows yields on Kenya’s Eurobonds declined by an average of 7.72 basis points, with the 2024 maturity declining by 36.2 basis points.
This is the first drop in the yields since December 13 when Kenya failed to honour a partial buyback plan that could have seen the country roll over at least 25 per cent of the $2 billion facility taken in 2014.
