The last month of the fiscal year saw fresh disbursements, which contributed to the steep increase in external debt. The devaluation of the local currency, which has dropped 17% since January, further hastened the depreciation.
“The Ksh309.4 billion ($2.1 billion) increase in external loans is attributable to disbursements made during the month and depreciation against major currencies,” said Treasury in the release.
Based on available statistics, the World Bank, Eurobonds, China, and the African Development Bank account for 73% of the nation’s external debt, totaling Ksh3.97 trillion ($26.4 billion).
The government is facing challenges in managing its high debt payment expenses due to its heightened reliance on these financial partners for fiscal support and infrastructure development.
According to Treasury projections, 38% of the entire debt payment expenditures for the current financial year would go to foreign lenders, bringing the total to a record Ksh1.62 trillion ($10.8 billion).
64% of the total regular revenue that the Treasury anticipates netting in the year ending June 2024 is represented by the Ksh1.6 trillion that will be utilized for debt servicing.
By the end of August, the overall debt to foreign lenders had increased from Ksh5.4 trillion ($35.95 billion) in June to Ksh5.7 trillion ($37.95 billion), or 54% of the entire governmental debt.
As the nation retires the 2024 Eurobond, which will take $2 billion out of its reserves—roughly Ksh300 billion—it will become increasingly vulnerable to foreign exchange risk.
