Kenya's public debt surges past Sh11trn on weak shilling

Kenya’s public debt shot up by Sh1.93 trillion in the year ended December 2023, raising the country's indebtedness to a new high of Sh11.14 trillion.

This translated to a daily increase of Sh5.29 billion for the entire 2023, the year when the Kenyan shilling shed 26.8 percent of its value against the US dollar.

The shilling’s depreciation had a heavy impact on external public debts, accounting for 73 percent (Sh1.4 trillion) of the Sh1.9 trillion increase during the year.

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“The gross public debt as at December 31, 2023 increased by Sh1.93 trillion to Sh11.1397 trillion compared to Sh9.2 trillion as at the end of December, 2022. The gross public debt comprised 54.7 percent external debt and 45.3 percent domestic debt," Treasury reported in the October-December 2023 quarterly economic and budget review report.

“The increase in the public debt is attributed to external loan disbursements; exchange rate fluctuations; and uptake of domestic debt during the period.”

Read: External public debt up Sh450bn as shilling loses value against major currencies

From January to the end of December 2023, total external public debt increased by Sh1.416 trillion, hitting Sh6 trillion.

On the other hand, total domestic debt increased by Sh514.48 billion, to hit Sh5 trillion.

External debts dominated the increase in the total public debt stock to account for 73 percent of the increase as the Kenyan Shilling depreciated heavily against the US Dollar, since the foreign currency accounts for more than two thirds of external debts.

Between the end of December 2022 and December 2023, the shilling lost 26.8 percent value, from trading at 123.37 units against the dollar to trading at 156.46 units. This meant that a Kenyan (or the government) purchasing dollars for debt service or importation of goods spent Sh33 more to access $1 by end of December 2023, than they required a year earlier.

“In dollar terms, external public debt stock increased by $1.04 billion from $37.878 billion in December 2022 to $38.92 billion by the end of December, 2023. The increase is attributed to increase in external loans disbursements and exchange rate fluctuations during the period,” Treasury reported.

Multilateral loans — accessed from organisations such as the World Bank and the International Monetary Fund (IMF) — had the highest increase of $1.62 billion. Bilateral loans (from other countries), however, dropped by $692.72 million to $9.089 billion in the year to December.

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“Compared to the same period in FY 2022/23, external public debt stock from multilateral institutions, commercial banks and from suppliers’ credit recorded an increase of Sh1.62 trillion, Sh105.4 billion and Sh8.8 billion respectively in the period ending December, 2023. Stock from bilateral sources recorded a decrease of Sh692.7 billion in the period under review,” Treasury reported.

The stock of gross domestic debt increased from Sh4.53 trillion in December 2022 to Sh5,05 trillion in December, 2023, led by increase in debt from non-banks by Sh303 billion, commercial banks debts which increased by Sh92.3 billion, and debt from the Central Bank of Kenya which raised by Sh77.2 billion to Sh224.47 billion.

“The stock of Treasury Bills held by Central Bank, Commercial Banks, Non-Banking Financial Institutions and Non-Residents declined by Sh124.6 billion from Sh671.5 billion in December, 2022 to Sh546.9 billion in December, 2023," Treasury stated.

“The total stock of Treasury Bonds, which include Floating, Fixed Rate, Special and Zero-Coupon Bonds, increased by Sh196.8 billion from Sh2.53 trillion in December, 2022 to Sh2.73 trillion in December, 2023."