Kenya’s stock of public debt increased by Sh127 billion in March, with the country chalking up more external loans as it sought to deal with the coronavirus pandemic.
The country’s total loans now stand at Sh6.28 trillion after it added Sh95 billion worth of foreign loans and Sh32 billion of domestic debt.
It is the first time in the current financial year that external debt has increased by a bigger margin than domestic debt in line with National Treasury Cabinet Secretary Ukur Yatani’s policy to move away from expensive commercial loans.
It comes at a time when the country has benefited from a debt repayment suspension from official bilateral lenders.
Kenya is expected to save approximately Sh71 billion from the debt service suspension by G20, a club of rich countries.
The Government plans to use the money to boost its health system and cushion the vulnerable population.
National Treasury is expected to resume repayment of bilateral loans early next year, with the debt moratorium expiring at the end of this year.
Public debt as of the end of February stood at Sh6.16 trillion. At the beginning of this month, the World Bank Group Board of Directors approved the disbursement of Sh5 billion to support Kenya’s response to the global pandemic under the Kenya Covid-19 Emergency Response Project.
Kenya is also expected to receive another Sh75 billion from the World Bank to help the country cushion against the crippling effects of the pandemic, including job losses.
The level of debt could change dramatically with the coronavirus crisis that has seen the government request up to Sh122 billion from the World Bank and International Monetary Fund.