Kenya’s public debt will surpass the Ksh10 trillion mark, following the government’s move to agree to include parastatal debts to the public debt.
The International Monetary Fund (IMF) had required that the government include parastatal and county loans as part of the country’s national debt.
Cumulatively, parastatals and counties loans amount to Ksh3.4 trillion, which will be added to the country’s debt of over Ksh7 trillion.
“The authorities noted the importance of expanding debt coverage to include counties, a non-guaranteed debt contracted by the extra-budgetary units, and State-owned Enterprises (SOEs). They planned to take a gradual approach to monitoring contingent liabilities, for example, to start to monitor external borrowing by large SOEs,” said the IMF in review of Kenya’s debt.
Public companies (parastatals) have a liability of Ksh1.494 trillion, Private-public partnership Ksh679 billion, Kenya Depositors Insurance Corporation Ksh261 billion, legal claims Ksh23 billion and pensions Ksh819 billion.
The Central Bank of Kenya warns that struggling parastatals could forfeit Ksh100 billion borrowed from 35 banks, worsening the debt status for the government.
The government only recognizes guaranteed debts to the public debt, but the IMF wants it to include all loans of State-linked firms.