External public debt up Sh450bn as shilling loses value against major currencies
Kenya's external debt stock stood at Sh5.89 trillion by the end of November, up from Sh5.4 trillion in June 2023.
What you need to know:
- The external debt stock moved from Sh5.4 trillion in June to Sh5.5 trillion in July, Sh5.61 trillion in August, Sh5.67 trillion in September and Sh5.7 trillion in October.
Kenya’s external debt rose Sh450 billion in the five months to November 2023 as the shilling lost value against major foreign currencies and amid more borrowing from multilateral lenders.
The external debt stock stood at Sh5.89 trillion by the end of November, up from Sh5.4 trillion by the end of June 2023, an increase of Sh449.9 billion on the stock between July and November.
Central Bank of Kenya (CBK) data shows overall public debt increased by Sh608.4 billion over the five months to stand at Sh10.887 trillion. This means that external debts accounted for 74 percent of the additional stock on the public debt.
The external debt stock moved from Sh5.4 trillion in June to Sh5.5 trillion in July, Sh5.61 trillion in August, Sh5.67 trillion in September and Sh5.7 trillion in October. Its share of the total public debt stock increased from 53.5 percent to 54.2 percent over the five months, the CBK data shows.
The external debt increased by 8.3 percent during the five months when the Kenyan shilling depreciated at 9.9 percent and 8.9 percent against the Euro and the US dollar respectively, with the two currencies constituting more than 80 percent of the external debt stock.
The increase was an acceleration from a 4.1 percent increase in the three months to September 2023, a factor the CBK had attributed to more inflows and exchange rate movements.
“Public and publicly guaranteed external debt increased by 4.1 percent during the first quarter of 2023/24. This increase was driven by disbursements from multilateral lenders and exchange rate movements,” the CBK noted in the July- September quarterly review report.
“The composition of external debt improved with increased flow of international development assistance in the form of concessional loans,” the CBK added, noting that disbursements from the International Monetary Fund (IMF) played a big role.
The Controller of Budget (COB), in the budget implementation review report for the first quarter of 2023/24, reported that Sh57.8 billion was received at the Consolidated Fund from external loans and grants in the three months ending September.
“The external loans and grants, despite having higher targets,recorded a decline of 32.9 percent (Sh28.39 billion), compared to the financial year 2022/23 similar period performance of Sh86.19 billion,” the COB observed. External debts denominated in US dollars and Euros cumulatively constituted 88.6 percent of the total external debt stock by the end of September, the CBK reported.
Debts owed to multilateral lenders constituted the highest increase of the external debt stock during the five months, rising by Sh308 billion, followed by debts owed to commercial banks which increased by Sh91.8 billion.
On the other hand, domestic debt stocks increased by Sh158.5 billion during the five months, with debts owed to non-banks increasing by the highest margin of Sh145.5 billion.
