Kenya’s public dept. Kenya has today bowed to International Monetary Fund (IMF) pressure to include Sh. 3.4 trillion parastatal and county loans as part of the country’s national debt.
The country had been drowning in debt since this government came into power with Kenyans concerned that the debt problem could make their recovery from the effects of COVID-19 difficult.
Most of the debt is from loans the country took from took from China to build the Standard Gauge railway and other major projects across the country including loans.
According to an article in the local dailies and seen by ShopaXo, the National treasury has announced inclusion of parastatal loans will be done in phases and will start with foreign currency debts.
According to the report, this will be a departure from the current state of loans where the Jubilee government only recognizes guaranteed debts.
The report adds, “IMF wants it to include all loans of State linked firms, a move that will push the country’s Sh. 7 trillion debt up by Sh. 3.4 trillion and crash through the Sh. 9 trillion debt limit.”
This development comes at a time the National treasury is seeking to borrow more by lobbying the National assembly to increase the debt ceiling to Ksh.12 trillion. This will enable the government to borrow even more.
Already leaders such as the ANC leader have been vocal about the borrowing, arguing that the government’s appetite for borrowing is worrying.
Records show that the current administration has borrowed more than the three previous regime combined.
In a report title Kenya’s Selected Specific Fiscal Risks, this is what IMF had to say, “The authorities noted the importance of expanding debt coverage to include counties, 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.’’
The local daily notes, “Public companies, most of which are loss making have a liability of Sh. 1.494 trillion, PPP’s (Sh. 679 billion), Kenya Depositors Insurance Corporation (Sh. 261 billion), legal claims (Sh. 23 billion) and pensions (Sh. 819 billion).”
According to IMF, Kenya’s public debt continues to rise, with the government guaranteeing Sh. 139 billion that includes some Sh. 75 billion to the national carrier, Kenya Airways.