Nairobi — National Treasury Principal Secretary Chris Kiptoo says the country currently has a fiscal deficit of Sh720.1 billion in the next fiscal year slated to begin on July 1.
He told the parliamentary committee on Public Debt and Privatization that the government hopes to raise a total of Sh198.9 billion through foreign funding.
"Commercial borrowing accounts for Sh270 billion, Programme Loans (Sh65 Billion), Project Loans & Appropriations-In-Aid (Sh239 billion) and External Repayment (Sh467 Billion)," he said.
Net domestic financing accounts for Sh521.5 Billion shillings.
Kiptoo told the Parliamentary team that the country's public debt stands at Sh9.1 trillion as of December 2022, where Sh4.67 trillion of the amount is external debt while Sh4.47 trillion is domestic debt.
"The growth in public debt is attributed to external and domestic borrowing and appreciation of the foreign currency exchange rate against the Kenyan Shilling during the period under review," he explained.
The National Treasury PS explained that 47 percent of the external debt comprises multilateral debt (Sh2.21 trillion). Bilateral debt accounts for 26 percent of all debt.
China accounts for 67 percent of the Sh1.21 billion bilateral debts.
27 percent of Kenya's external debt is commercial debt with Eurobond accounting for Sh870 billion (19 percent)
Treasury Bonds account for 84 percent (Sh3.71 trillion) of domestic debt; while Treasury Bills 14 percent (Sh670 trillion) and Sh90 Billion is mainly overdraft from the Central Bank of Kenya.
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"The present value of debt as a percentage of GDP is at 60 percent and projected to decline to 53.1 percent in Financial Year 2025-2026 under the fiscal consolidation program policy stance outlined in the 2023 BPS," he stated.
He cautioned that the combination of the debt stock and the projected net borrowing for the remaining part of the current year and the fiscal deficit is likely to push the country's public debt stock beyond the Sh10 trillion debt limit in the Financial Year 2023-2024.
"The public debt is projected to be Sh9.41 trillion as of June 2023 implying a borrowing space of Sh587 billion in the FY 2023/2024," he stated.
He noted it is for this reason that the National Treasury initiated the process of amending the debt ceiling from the numerical number of Sh10 Trillion to a debt anchor of 55 percent of Debt to GDP in present value terms.
"The ratio of the total debt maturing in one year as a share of GDP has been gradually declining over time, thus reducing the refinancing and settlement risk. The reduction is consistent with the current Medium Term Debt Strategy (MTDS) to minimize the stock of Treasury Bills relative to Treasury Bonds," Kiptoo explains.
