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Foreign lenders increase debt to Kenya by Ksh24 billion

Foreign commercial banks and multilateral lenders increased their lending to the State by a combined Ksh24 billion between June and November 2014, the Central Bank of Kenya data shows. The latest external creditors’ debt profiles published by CBK show multilateral lenders such as the African Development Bank and the World Bank soft terms lender International Development Association increased lending to Kenya by Ksh20 billion to Ksh614.2 billion after the end of November.

The stock of external debt held by commercial banks went up by Ksh3.8 billion to Ksh182.4 billion. On the other hand, the debt owed to bilateral lenders (government-to-government) decreased by Ksh17.6 billion over the period to stand at Ksh272.3 billion. “Kenya’s public and publicly guaranteed external debt increased by Ksh3 billion to Ksh1.089 trillion in November 2014, from Ksh1.085 trillion in June 2014. The growth was largely driven by exchange rate revaluations,” said CBK in the monthly economic report for November.

The report says debt to the Central government was Ksh1.048 trillion, while the rest was to parastatals guaranteed by the State. The decline in the debt owed to bilateral lenders saw their share of the total debt reduce from 26.7 per cent to 25 per cent, while that of the commercial banks increased from 36.8 to 17.1 per cent.

The share of debt owed to multilateral lenders increased from 55 per cent in June 2014 to 56.4 per cent in November. Kenya’s domestic and external debt ratios changed considerably in June with the successful debut sovereign bond, which saw investors offering nearly $8 billion or four times the $2 billion target.

With domestic debt now at Ksh1.3 trillion, the country’s total debt is nearly 52 per cent of the gross domestic product. Kenya’s debt is still below the 74 per cent threshold set for it by the World Bank in its country and Policy Institutional Assessment Index.

Last week, National Treasury Cabinet Secretary Henry Rotich said the economy still has large headroom to absorb and pay back more loans.

He said a debt sustainability analysis looking at the next 30 years in terms of payments plus interest shows Kenya can afford to meet its debt obligations, on the basis of projected growth that is seen at seven per cent by 2018.

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