Kenya’s Public Debt Surges Past Sh11 Trillion
In the period concluding in December 2023, Kenya experienced a significant increase in its public debt, reaching Sh11.14 trillion, with a rise of Sh1.93 trillion during the year.
This equated to a daily rise of Sh5.29 billion throughout 2023, a period during which the Kenyan shilling depreciated by 26.8 percent against the US dollar.
The decline in the value of the shilling significantly influenced the rise in external public debts, constituting 73 percent (Sh1.4 trillion) of the total Sh1.9 trillion increase over the year.
“The gross public debt as of December 31, 2023, increased by Sh1.93 trillion to Sh11.1397 trillion compared to Sh9.2 trillion as at the end of December 2022. The gross public debt comprised 54.7 percent external debt and 45.3 percent domestic debt,” Treasury reported in the October-December 2023 quarterly economic and budget review report.
“The increase in the public debt is attributed to external loan disbursements; exchange rate fluctuations; and uptake of domestic debt during the period.”
Between January and December 2023, the overall external public debt rose by Sh1.416 trillion, reaching a total of Sh6 trillion.
Meanwhile, the overall national debt rose by Sh514.48 billion, reaching a total of Sh5 trillion.
The surge in the overall public debt was primarily driven by external debts, making up 73 percent of the total increase. This was influenced by the significant depreciation of the Kenyan Shilling against the US Dollar, given that more than two-thirds of external debts are denominated in foreign currency.
From the conclusion of December 2022 to December 2023, there was a depreciation of 26.8 percent in the value of the shilling. Its exchange rate shifted from 123.37 units against the dollar to 156.46 units during this period.
This implies that by the end of December 2023, a Kenyan individual or the government had to spend an additional Sh33 to obtain $1 for debt servicing or importing goods compared to the amount needed a year prior.
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“In dollar terms, external public debt stock increased by $1.04 billion from $37.878 billion in December 2022 to $38.92 billion by the end of December 2023. The increase is attributed to an increase in external loan disbursements and exchange rate fluctuations during the period,” Treasury reported.
Multilateral loans, obtained through institutions like the World Bank and the International Monetary Fund (IMF), experienced a notable surge, registering a substantial increase of $1.62 billion. In contrast, bilateral loans from other countries witnessed a decline of $692.72 million, decreasing to $9.089 billion by the end of December in the given year.
“Compared to the same period in FY 2022/23, external public debt stock from multilateral institutions, commercial banks, and from suppliers’ credit recorded an increase of Sh1.62 trillion, Sh105.4 billion, and Sh8.8 billion respectively in the period ending December 2023. Stock from bilateral sources recorded a decrease of Sh692.7 billion in the period under review,” Treasury reported.
The gross domestic debt stock rose from Sh4.53 trillion in December 2022 to Sh5.05 trillion in December 2023. This increase was driven by a rise in non-bank debt by Sh303 billion, a Sh92.3 billion increase in commercial bank debts, and a Sh77.2 billion increase in debt from the Central Bank of Kenya, reaching a total of Sh224.47 billion.
“The stock of Treasury Bills held by Central Bank, Commercial Banks, Non-Banking Financial Institutions and Non-Residents declined by Sh124.6 billion from Sh671.5 billion in December 2022 to Sh546.9 billion in December 2023,” Treasury stated.
“The total stock of Treasury Bonds, which include Floating, Fixed Rate, Special and Zero-Coupon Bonds, increased by Sh196.8 billion from Sh2.53 trillion in December 2022 to Sh2.73 trillion in December 2023.”
Kenya’s Public Debt Surges Past Sh11 Trillion