Antipersonnel mines in Kenya

Kenya's growing debt has been a hot topic for some time. With a debt in the range of 5 trillion Shillions, the question is how long will it last? While the Treasury has always been quick to point out that debt is still within the bounds of fiscal prudence, badysts have consistently warned that the economy is starting to feel the heat.

Economic badysts say that the country is particularly obliged to find itself in a rather difficult path this financial year where some of the major debts will reach maturity.

To mitigate the impact of debt repayments, the Treasury will be forced to negotiate a series of refinancings, a measure to which it has already resorted. Debt refinancing, like refinancing is also mentioned, is expected to be the norm as government credit facilities become due.

Treasury Secretary Henry Rotich has earmarked 870.62 billion shillings to repay the maturing debt. In the current year ending next June, almost double the estimates of 455.34 billion shillings for the year ended last month and 35.72 billion shillings in 2016-17.

That means 49.95 percent, nearly half The treasuries that the Treasury intends to collect from taxpayers will be spent to pay off the debt, well above the debt service threshold recommended 30 percent.

Debt repayments are more than double the 394.89 billion shillings allocated to development projects, highlighting the impact on economic activities.

Domestic debt repayments are estimated at about 505.96 billion shillings between this month and next June, according to Treasury statistics, while the external debt obligations are estimated at 364.66 billion Sh.

Long-term domestic debt since September 2014 to build roads, bridges, power plants and the Standard Gauge railway. The government is counting on these megaprojects to accelerate economic growth and justify the current debt burden.

It should be noted that the beginning of the increase in short-term domestic loans coincided with the period when Kenya was converted back into a lower middle-income economy, excluding highly concessional loans development lenders such as the World Bank. International Development Association of the Group

Part of the external debt that is expected to be repaid during this financial year includes the five-year portion of the first Euro-bond, estimated at 78.30 billion shillings and 78.74 billion shunts , according to badysts Genghis Capital

The commercial loan was contracted early last year from Standard Chartered, Standard Bank, Citi and Rand Merchant Bank

"The bonds of external debt during Fiscal year 2018 reached 41.88% of the total public debt, 36.97% for fiscal year 2011/18 mainly due to external debt repurchases.This highlights the currency risk because a weaker local unit drives up the external debt obligations, "said Genghis badysts in a recent note

. Kenya's total public debt rose to 4.888 billion shillings in May. According to recent data from the Central Bank of Kenya, foreign loans total nearly 2,374 billion shillings, according to the latest data from the Central Bank of Kenya

"With a debt equivalent to 7.449 billion shillings last December. Policymakers need to read the signals that the market is issuing, "said Aly-Khan Satchu, managing director of Rich Management, an investment advisor.

"The markets have been incredibly favorable in the first quarter (January-March) 2018, but are no longer, the treasury must remain at the forefront and make changes in advance." [19659004] Mr. Rotich maintained that the level of debt remains sustainable and well below 74 percent of GDP for a lower middle-income country like Kenya, measured by the index of social security. the World Bank, but has kept a close eye on the maturing debt, which could expose the country to high refinancing risk due to lower than expected tax revenues. [19659004TheTreasuryisnegotiatingtorefinanceitsmaturingdomesticdebtbyraisingtaxrevenuesrefinancingSh20288billionbetweenJanuaryandMay

"The government is exposed to refinancing risk. At the end of fiscal 2017/18 (last month), the main refinancing risk is badociated with high repayments of domestic debt (37.7% at maturity of the year largely consisting of good Treasury). Debt management strategy for the period ending June 2021.

"The average maturity period (ATtM) for the domestic debt portfolio is 4.4 years and that of the external debt portfolio of 9, 7 years."

According to the report, the main risk is related to the US dollar, at 67.3%, followed by the euro (16.6%), the Japanese yen (6.3%) and the British pound. . (2.9%)

"Efforts are being made to diversify and maintain the composition of Kenya's debt currencies The National Treasury's strategy for managing currency risks is to seek to match the currency of external liabilities and Kenyan currency composition: Mr Rotich says in debt management strategy

The Treasury plans to reduce the budget deficit, the main driver of debt, to 562.75 billion shillings or a public debt reduction, the equivalent of 5.75% of GDP, this exercise being mainly due to the reduction of non-priority expenditure such as travel and entertainment costs

but remains below its target of 3% by 2021.

You regularly start crossing five percent (tax gap) for several years, you start to encounter problems to meet your financial obligations, "said David Cowa n, Citibank's chief economist for Africa, during an interview in Nairobi in February. "The solution is to maintain and keep the inflation rate down and issue a long-term local debt as much as possible." That's the way forward. country. "