Kenya Debt Limit: The government is broke and its borrowing appetite is nowhere close to being whetted. In its latest effort to rake in additional debt, the National Treasury is planning to have the national borrowing limit raised to Sh. 12 trillion. This is despite the current national debt hovering around Sh. 9 trillion. This means that the Kenya debt limit will be raised by an astonishing Sh. 3 trillion.
By the time President Uhuru Kenyatt took over from former president Mwai Kibaki in April 2013, the national debt stood at Sh. 1.8 trillion.
According to a report that appeared in the Daily Nation on Tuesday, the new Sh. 12 trillion limit is part of the proposed amendments to the Public Finance Management (National Government) Regulation.
“The proposal to raise the debt ceiling comes in barely two years of Parliament voting to amend the regulations to increase the country’s debt ceiling from the then 50 per cent of the gross domestic product (GDP) in the net present value (NPV) to the numerical figure of Sh. 9 trillion. Since November 2019, when the regulations were amended, the country has already accumulated public debt in the region of Sh. 8.5 trillion,” the report in the Daily Nation said.
Over the past few months, signs that Kenya is weighed down by swelling public debt and is facing the possibility of a debt crisis (where the government can’t repay what it owes) have manifested more prominently. Kenya’s stock of debt zoomed past the Sh. 7 trillion mark in August wounding up at Sh. 7.1 trillion from a flat Sh. 6 trillion at the start of 2020. In September last year, Kenya’s debt servicing cost to export ratio crossed the IMF-recommended threshold of 21 percent for the first time. A third of the total debt was made up of commercial debt such as Eurobonds and syndicated loans. In December, the government delayed salaries of civil servants after lacking funds with which to pay.
The weakening of the shilling has further exacerbated things for Kenya. This is because as the Kenya shilling continues to weaken against the dollar, the country has been adding more than Sh. 30 billion to its overall public debt from its dollar-dominated foreign debt portion, and increasing the interest of dollar-dominated loans. Borrowing Limit Kenya.