- Kenya Airways guaranteed loan become non-performing and a liability of the national government
- Kenya Airways’ net loss more than doubled to hit a record Sh38.26 billion in the financial year ended December 2022
The government will incur an expenditure of Sh17.19 billion to pay for Kenya Airways' guaranteed debt, Parliamentary Budget Office Report shows.
The report, which provides an analysis of the Consolidated Fund Services (CFS) expenditure for the 2023/2024 Financial Year, said the amount will be an increase by Sh2.51 billion in the previous year.
Public debt service, pensions, salaries for those holding constitutional offices and guaranteed debt are among the expenses falling under CFS.
Article 213 of the Constitution and Section 58 of the Public Finance Management provide for the government to give loan guarantees to State entities upon approval by Parliament.
“As of June 2022, the total outstanding guaranteed debt was Sh136.6 billion consisting of Sh68.1 billion and Sh67.3 billion commercial and bilateral loans respectively showing an elevated exposure to contingent liabilities,” the report stated.
The report further noted that Kenya Airways' guaranteed loan become non-performing and liability of the national government whose repayment is a charge on the Consolidated Fund as provided for in Section 60 of the PFM Act.
The report added that the government will incur an estimated expenditure of Sh22.16 billion in the 2024/2025 financial year repaying the KQ loan.
The amount will slightly drop to Sh19.55 billion in 2025/2026 and Sh19.55 billion in the 2026/2027 period.
Kenya Airways’ net loss more than doubled to hit a record Sh38.26 billion in the financial year ended December 2022 due to a rise in financing costs after the government took over servicing one of the dollar-denominated loans.
The net loss grew 1.4 times from Sh15.87 billion posted in 2021 and takes the national carrier’s accumulated loss to Sh172.68 billion.
The board, however, said the airline is on course to hit break-even point this year and profitability by 2024.
The last time the national carrier made profits was in 2012 when it closed with net earnings of Sh1.66 billion.