Kenya risks losing investors and economic gains realised if the government does not contain runaway debt, the IMF has warned.
International Monetary Fund officials yesterday told a parliamentary committee the country’s excessive borrowing amid huge revenue deficit for the economy is worrying.
Senior IMF representatives for Kenya Jan Mikkelsen, Ben Clements and Nike Hobdari told the National Assembly Budget and Appropriations Committee the debt which hit Sh4.6 trillion in November would be unmanageable if borrowing continues.
“We have been much concerned about the flow of new debts and the size of fiscal deficit. It will reach a point where the debt is not manageable especially when the deficit continues to rise,” Mikkelsen said.
The caution comes barely two days after a report by Cytonn Investments warned that the debt would hit crisis point if the state does not invest borrowed funds in projects with high returns to repay the loans.
Kenya plans to repay Sh658.2 billion in loans in the financial year ending June. The loan repayment sum is equivalent to 40.3 per cent of Sh1.6 trillion revenue target.
Loans the country plans to clear include the Sh77 billion eight-year commercial loan from Eastern and South Africa Trade and Development Bank. The government borrowed the money in 2015 to repay other debtors who refused to extend maturity of the syndicated loan.
Other loans include Sh75 billion from the five-year Eurobond issued in 2014 maturing in June 2019 and Sh80.9 billion syndicated loan borrowed in 2016.