The debt is rising faster as the cash-strapped government seeks to plug holes in its budget and finance various infrastructure projects, including construction of the standard gauge railways.
The debt, currently stands at over 28.4 billion dollars, most of which is domestic, and is 54 percent of the Gross Domestic Product (GDP), up from 52.8 percent in June, a new debt report show on Monday.
The Central Bank of Kenya report indicated that the debt has been rising by up to 618 million dollars in a month due to the intensified borrowing.
For instance, between June and July, the figures showed that East African nation borrowed 617 million dollars.
The increased borrowing was further exacerbated by the weakening of the shilling making the country to push up its interest rates on government securities to mop up excess liquidity in the market.
Through the government securities, Treasury has been borrowing up to 190 million dollars in a week to prop up the shilling.
The move has, however, helped widen the public debt, with domestic debt accelerating faster to about 16 billion dollars. Kenya’s domestic debt has been on the rise since last year, closing 2014 at 14.5 billion dollars.
“The average length of maturity of existing domestic debt remains at 5 years and 2 months, which was similar to average time to maturity reported in June,” said the CBK.
External debt has also accelerated, with the government late last month borrowing a syndicated loan of over 588 million dollars when it ran out of cash.
The money, according to Treasury, would go to finance projects in roads, energy, agriculture and water sectors.
External debt to GDP ratio stands at 28 percent from 26.3 percent in June while domestic debt to GDP ratio at 27 percent, according to the CBK.
“The growth in external debt during this period was attributed to disbursements from Exim Bank China, concessional loan from International Development Association (IDA) and exchange rate revaluation,” said the CBK.
China has beaten Japan and Western nations to become Kenya’s top bilateral lender. In March for instance, the Asian nation lend Kenya 2.2 billion dollars. Japan comes second and France third.
Official debt to multilateral and bilateral lenders account for 79.3 percent of total public and publicly guaranteed external debt.
“The proportion of external debt denominated in the US dollar and Japanese Yen has increased from 56.2 percent and 9.3 percent in June to 56.8 percent and 9.4 percent, respectively,” said the CBK.
“While that denominated in the Euro and Yuan declined from 24.2 percent and 4.4 percent in June to 23.6 percent and 4.3 percent, respectively,” it said. Enditem