Kenya’s Central Bank has released its quarterly economic report, concluding that the country’s debt remains sustainable in the medium to long term, bolstered by proactive policy measures and anticipated robust export growth.
However, concerns linger regarding the overall and external ratings for debt distress, which remain high.
As of March 2024, Kenya’s public and publicly guaranteed debt stands at Ksh10.3 trillion ($79.3 billion), accounting for 67% of the nation’s gross domestic product (GDP).
Notably, domestic debt forms 50.3% of this total, while external debt, primarily denominated in dollars and euros, constitutes the remainder.
The bank reported that Kenya successfully repaid its $2 billion Eurobond before the June 24 deadline and effectively raised $1.5 billion in a Eurobond buyback offer in February to mitigate repayment risks.
The report indicates a favorable trend in Kenya’s debt burden indicators, attributed to increased fiscal efforts. Nevertheless, the Central Bank warned that the country remains vulnerable to export, exchange rate, and primary balance shocks.
The Debt Sustainability Analysis highlights the necessity for ongoing initiatives to enhance export volumes and generate additional revenue, reinforcing external debt sustainability.
In a positive turn, Kenya’s exports to Africa have surged, with the value of goods exported climbing to a record $1.81 million in the first quarter of 2024. This upward trajectory in exports is critical as it strengthens the nation’s economic resilience.
While the government navigates the complexities of its debt portfolio, the emphasis remains on bolstering export capacity and ensuring fiscal prudence to mitigate future risks.
The Central Bank’s report underscores the importance of sustained economic policies in maintaining Kenya’s overall debt sustainability amidst a volatile global economic landscape.
