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September 20, 2018

Kenya borrowed an average of Sh1.7bn daily in 2017/18 period

Cabinet Secretary Henry Rotich (C) with PS Kamau  ugge (L) and Central Bank of Kenya Governor Patrick Njoroge leave National Treasury building for Parliament to present the 2016-17 budget on June 8, 2016 /JACK OWUOR
Cabinet Secretary Henry Rotich (C) with PS Kamau  ugge (L) and Central Bank of Kenya Governor Patrick Njoroge leave National Treasury building for Parliament to present the 2016-17 budget on June 8, 2016 /JACK OWUOR

The government borrowed an average of Sh52.67 billion monthly in the last financial year, according to data from the National Treasury.

The cumulative borrowing over the period was Sh632 billion pushing the country’s overall debt to Sh5.04 trillion from Sh4.41 trillion as at June 2017.

Compared to June 2016, the debt has increased by Sh39.53 per cent or Sh1.43 trillion, the full year economic and budgetary review ending June 2018 shows.

Having passed the Sh5 trillion mark in under two years, the debt means that every Kenyan owes lenders atleast Sh107,708. Half of the debt or Sh2.69 trillion is external while the remaining 47.92 per cent or Sh2.47 is the total domestic debt stock.

The external debt includes the international sovereign bond, multilateral debt, bilateral debt, suppliers credit debt, and commercial banks debt. It increased by Sh527.6 billion from Sh2.13 trillion in June 2017 to Sh2.69 trillion

The stock of domestic debt increased by Sh366.5 billion to Sh2.47 trillion from Sh2.11 trillion. Within the period, treasury bills held by Central Bank, commercial banks, non-banking financial institutions and non residents increased by Sh134.5 billion. The increase was from Sh744.2 billion in June 2017 to Sh878.6 billion.

The total stock of treasury bonds which include floating, fixed rate, special and zero coupon bonds increased by Sh67.5 billion from Sh989.9 billion in June 2017 to Sh1.01 trillion in June 2018.

Due to the high debt obligation, Treasury was forced to reduce the budget deficit from 7.2 per cent to three per cent in June.

 A big chunk of the debt has been used in infrastructure projects, mostly construction of the Standard Gauge Railway and roads.

In the first phase of the SGR that saw the railway line move from Mombasa to Nairobi, Chinese banks and the government lent Kenya Sh327 billion for the 472-kilometre stretch and a further Sh150 billion to push it to Naivasha.

According to the budgetary review, the Chinese government had lent Kenya at least Sh553.26 billion as at June 2018 topping the list of creditors. This is up from Sh461.47 billion.

Japan followed in the second position having loaned Kenya Sh100.82 billion in June 2018 from Sh88.34 billion in June 2017.

The third top creditor is France, having lend Kenya Sh61.14 billion as at June 2018 from Sh61.45 billion in June 2017.

Belgium, Germany and Netherlands are also among other countries which have loaned Kenya.

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