A month to his exit from the Central Bank of Kenya (CBK), the governor Dr Patrick Njoroge has broken his silence on Kenya’s appetite for loans.
According to Njoroge, Kenya’s borrowing headroom is shrinking and it is time to restrategise her appetite for loans as it could affect the country’s growth.
“It is important to say that the moment for dealing with debt reorganization, looking at debt and itself reorganizing it,…that moment has come,” said Njoroge.
The government through treasury CS Henry Rotich has been insisting that the government is within the limits of public borrowing, and that there is no risk involved.
Recently, the government sealed a $2.1 billion (Ksh210 billion) Eurobond from the United States and the United Kingdom, days after Kenya was allegedly denied a loan from China.
The Eurobond will be repaid in two tranches of 7-year and 12-year tenors, according to information from the Treasury.
The government said that the bond has been priced at seven per cent for the 7-year issue and eight per cent for the 12-year plan.
Njoroge said that the bond gave Kenya “more room to expand the economy and increase export capacity.”
However, it emerged this week that the government has written to the World Bank, requesting a Ksh75 billion loan, to finance the 2019/2020 budget estimated at Ksh2.7 trillion.
Kenya’s public debt as a percentage of gross domestic product (GDP) has increased to 55 per cent from 42 percent when President Uhuru Kenyatta took office in 2013.
Experts have been warning of Kenya’s rising debt and its ability to service the loans with a big chunk of its revenues being lost to corruption, while the better part goes to recurrent expenditure.