Kenya risks losing investors and its economic gains if the government does not contain the runaway debt burden, IMF has warned.
The International Monetary Fund officials on Thursday told a parliamentary committee that the country’s excessive borrowing amid huge revenue deficit for the economy is worrying.
Senior IMF representatives for Kenya Jan Mikkelsen, Ben Clements and Nike Hobdari told National Assembly’s Budget and Appropriations Committee chaired by Kimani Ichungwa (Kikuyu) that the debt which hit Sh4.6 trillion in November last year would be unmanageable if the borrowing trend continues.
“We have been much concerned about the flow of new debts and the size of revenue deficit. It will reach a point where the debt is not manageable especially when the deficit continues to rise,” Mikkelsen said.
The IMF warning comes barely two days after the release of a new report by Cytonn Investments warning that the country’s debt would hit a crisis if the state does not invest borrowed funds in projects with high returns to enable the government to repay the debt.
Kenya plans to repay Sh658.2 billion in loans in the current financial year ending June this year.
The loan repayment sum is equivalent to 40.3 per cent of Sh1.6 trillion revenue target.
Loans the country plans to clear include the Sh77 billion eight-year commercial loan from Eastern and South Africa Trade and Development Bank the government borrowed in 2015 to repay other debtors who refused to extend maturity of the syndicated loan.
Other loans include Sh75 billion from the five-year Eurobond issued in 2014 maturing in June 2019 and Sh80.9 billion syndicated loan borrowed in 2016.
