Kenya’s Treasury Cabinet Secretary, John Mbadi, has indicated that the country will face significant debt repayments over the next decade, with substantial relief expected only by 2034.
The repayment schedule includes $1 billion in 2027, another $1 billion in 2028, $1.5 billion by 2031, and $1.2 billion in 2034.
This timeline underscores the financial challenges Kenya must navigate in the coming years.To address these challenges, the government is exploring various strategies. One notable initiative is the negotiation of a $1.5 billion commercial loan with the United Arab Emirates (UAE).
This loan, proposed at an 8.25% interest rate over seven years, is intended to diversify Kenya’s financing sources.
The move comes after domestic protests led to the abandonment of planned tax hikes and delayed disbursements from the International Monetary Fund (IMF).
Mbadi emphasized that this loan is more cost-effective compared to a previous Eurobond issued at a 10.7% interest rate.
However, the IMF has raised concerns about the external and dollar-denominated nature of the loan, suggesting it could increase financial risks.
The government is currently in discussions to address these concerns and is seeking a transaction adviser for the deal.
In addition to seeking external financing, Mbadi has pledged to enhance transparency in managing Kenya’s public debt.
During his vetting by the National Assembly’s Committee on Appointments, he advocated for the annual publication of Kenya’s debt records.
He believes that making a debt register a statutory document, published yearly, would allow citizens to understand the specifics of the country’s financial obligations.
This move aims to foster public trust and ensure accountability in debt management. Furthermore, Mbadi has announced a three-year plan to reduce taxes, aiming to alleviate the financial burden on Kenyan citizens and stimulate economic growth.
The plan includes reducing Value Added Tax (VAT) from 16% to 14% and cutting corporate tax from 30% to 25%.
These tax cuts are part of a broader strategy to bolster economic resilience, particularly in key sectors such as agriculture, manufacturing, and housing.
Despite fiscal constraints, the government is committed to prioritizing growth and expanding opportunities, focusing on sectors critical for economic recovery.
Mbadi has also assured Kenyans of an economic revival within a short period.
Speaking during President William Ruto’s visit to Homa Bay County, he expressed confidence in his ability to revive the economy within one year, urging citizens to give the government time to stabilize and set the economy on a path to recovery.
While Kenya faces significant debt repayments in the coming years, the government, under the leadership of Treasury CS John Mbadi, is implementing measures to manage these obligations.
By seeking more favorable loan terms, enhancing transparency in debt management, reducing taxes to stimulate economic growth, and assuring citizens of an imminent economic revival, the government aims to navigate the financial challenges ahead and achieve substantial relief by 2034.
