Kenya Obligated to Pay Ksh.161 Billion Debt by October, Says CS Mbadi

Kenya is required to pay Ksh.161 billion in debts by October, primarily arising from Eurobond and syndicated loans. Cabinet Secretary Mbadi highlighted scheduled payments, including Ksh.116 billion Eurobond due by May 2027, to be repaid in three installments. The government is managing an equal ratio of domestic and foreign debts to minimize exposure to interest rate fluctuations.

Kenya is expected to settle a substantial debt of Ksh.161 billion by October, as articulated by Cabinet Secretary Mbadi during an interview on Spice FM. This financial obligation primarily stems from Eurobond and syndicated loans. Notably, Kenya faces a Eurobond payment of Ksh.116 billion, which is due by May 2027, to be dispensed in three equal installments of Ksh.38.8 billion annually until the expiry date.

Furthermore, the nation has an additional liability of Ksh.952 million related to syndicated loans, which must be addressed within eight months. Mbadi clarified that these debts are categorized as commercial loans, provided by financial institutions that engage directly with the Kenyan government. In September alone, Kenya is tasked with repaying Ksh.25.8 billion to the Trade and Development Bank, Ksh.10 billion elsewhere, and Ksh.83.5 billion, culminating in total payments amounting to Ksh.123 billion by October.

He also highlighted the impending need for an extra Ksh.38 billion by 2025 for the Eurobond, emphasizing the significant financial strain resulting from these obligations. The current debt distribution between domestic and foreign borrowing is nearly equal, with domestic debts reaching approximately Ksh.5.6 trillion and foreign debts around Ksh.5.1 trillion. This balanced policy aims to protect taxpayers from fluctuations in interest rates.

The challenge of addressing Kenya’s escalating debt crisis has persisted across various administrations, hindering the nation’s economic stability and growth. Kenya is currently engaged in three forms of debt: multilateral, bilateral, and commercial loans. Multilateral debts involve institutions such as the World Bank, IMF, and African Development Bank Group, considered relatively manageable for nations in debt distress.

In contrast, bilateral debts concern transactions between Kenya and other sovereign nations, while commercial debts, including Eurobonds and syndicated loans, are supplied under commercial terms, typically accompanied by higher interest rates. This pressure to fulfill obligations is crucial to avoid defaulting on payments.

In conclusion, Kenya faces a pressing need to manage its substantial debt obligations amounting to Ksh.161 billion by October, encompassing Eurobond and syndicated loans. The balanced debt strategy between domestic and foreign borrowing seeks to mitigate risks related to interest rate fluctuations. Addressing the ongoing debt crisis remains critical for sustaining the nation’s economic growth and stability in the foreseeable future.

Original Source: www.citizen.digital