KENYA'S public debt rose to Sh1.6 trillion as at end May 2012, or 48.9 per cent of the country's Gross Domestic Product. This is just a few points to the 50 per cent mark (of GDP) that the Treasury has warned is not manageable. Public and publicly guaranteed debt rose by 0.81 per cent over the end April 2012 position attributed to depreciation of the Kenya shilling and increased disbursements from external creditors.
According to Treasury's latest debt figures, external debt rose by Sh20.14 billion to stand at Sh721.04 billion, while domestic debt declined by Sh7.18 billion to stand at Ksh 888.86 billion in May 2012. Finance Minister Njeru Githae told Parliament last month that the public debt becomes unmanageable and unsustainable if it goes beyond 50 per cent of the GDP.
The budget committee tabled a report in Parliament the same month decrying the growing public debt. The legislators said the country's public debt to GDP ratio has increased with the Treasury shifting the target from 42 per cent to 45 per cent to 47 per cent and now 48.9 per cent. "This is a worrying trend. Furthermore, public debt has increased on account of maturity of Treasury Bonds. How does Treasury intend to manage debt?" MPs queried in the report.
Githae said that Treasury has put in place a "self imposed rule" of not exceeding debt to 50 per cent of GDP. According to Treasury, the bulk of the money is going to the energy and infrustructure sectors which have recieved more than 37 per cent of the total external loan. This could be a positive pointer that most of the loan receipts are going to develoment projects. The general economic, commercial and labour affairs is the second sector with 22 per cent supporting the balance of payments and bugdetary support, Treasury says.
Official creditors account for 97.9 per cent of the total public and publicly guaranteed external debt, out of which debts owed to multilateral creditors (Sh451.22 billion including Sh3.91 billion guaranteed debt owed to International Development Association) dominate the portfolio (62.6 percent of the total). Bilateral debt stands at Sh254.68 billion (35.3 percent of the total), which includes Sh45.04 billion guaranteed debt. "Supplier credit debt remains relatively unchanged as these debts are not being serviced due to the current disputes with the creditors ," Treasury assures in respect of controversial contracts such as Anglo-Leasing.