Nairobi — Kenya's debt burden has reached Sh1.19 trillion. This means each of the 40 million Kenyans owes foreign and domestic creditors Sh29,750, which is more than the take-home salary of many workers.

The latest figures posted on the Treasury website indicate that as at April this year, external debt stood at Sh533 billion, representing 21 per cent of the country's Gross Domestic Product. The domestic debt increased to Sh654 billion.

High levels of government borrowing can drive interest rates up, forcing businesses and households to pay more for money borrowed from banks. This can in turn discourage investment and depress long-term economic potential.

However, the Treasury explained that the significant rise in domestic debt was in line with the fiscal policy of increasing domestic borrowing and supporting the Economic Stimulus Programme to kick-start the economy.

The stimulus package was launched in July 2009 to spur economic growth and increase investor confidence following the post-election chaos.

The government anticipates a four to five per cent growth this year, driven by increased investments in agriculture, service industry, infrastructure, health and education.

Foreign financial institutions like the African Development Bank, International Monetary Fund and the International Development Association are some of the major creditors in the multilateral sector.

At the bilateral level, countries like Japan (Sh56 billion), France (Sh28 billion) and Germany (Sh16 billion) top the list of creditors.

"Multilateral creditors have continued to hold the largest share of disbursed outstanding debt owed by the government,

"With 65.6 per cent of the total stock, they account for more than double the outstanding bilateral external debt stock, while others (commercial creditors) stand at 4.0 per cent," says the Treasury.

However, the money owed to other creditors remains relatively unchanged as debts are not being serviced due to disputes with the creditors.

In June, Finance minister Uhuru Kenyatta presented the biggest budgets in the country's history -Sh998 billion - to be financed through revenues from taxes and heavy borrowing in the domestic and external markets.