Kenya’s external debt has risen to about Sh6.53 trillion, adding pressure to the government as it continues to deal with a growing public debt burden.
Treasury figures show that multilateral lenders now account for the largest share of the country’s external borrowing, making institutions such as the World Bank and African Development Bank increasingly important creditors to Kenya.
The latest figures come at a time when the government is facing difficult choices on how to finance its programmes while keeping the country’s debt at manageable levels. Kenya has continued to borrow to support development projects, meet budget needs and refinance existing obligations, but the rising debt stock has increased concerns over the amount of money that goes towards repayment.
Domestic debt has also crossed the Sh6 trillion mark, pushing Kenya’s total public debt to roughly Sh13 trillion.
This means the country is carrying a heavy financial obligation both locally and internationally. The large debt stock requires the government to set aside significant amounts of revenue for interest payments and repayment of loans, reducing the funds available for other public needs.
The composition of Kenya’s external debt has also been changing. Multilateral lenders, which include international financial institutions, have taken a larger position in the country’s debt portfolio.
The World Bank and African Development Bank are among the institutions that have become more significant sources of financing.At the same time, China’s share of Kenya’s external debt has been declining.
China was previously one of Kenya’s biggest external creditors, particularly after the government took large loans to finance major infrastructure projects.
The reduction in its share signals a shift in where Kenya is seeking external financing.
The growing reliance on multilateral lenders could offer the government access to loans with different repayment terms compared with some commercial borrowing.
However, it does not remove the wider challenge posed by the size of Kenya’s debt.
With external and domestic obligations both running into trillions of shillings, managing public finances will remain a major task for the government.
Kenya will need to balance the need for development spending with efforts to control borrowing, raise revenue and meet existing debt obligations without putting further strain on taxpayers.
