Sharp Daily
No Result
View All Result
Saturday, June 28, 2025
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team
Sharp Daily
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team
No Result
View All Result
Sharp Daily
No Result
View All Result
Home News

The risk of debt to Kenya’s economy: Can it recover?

Duncan Muema by Duncan Muema
October 19, 2023
in News
Reading Time: 2 mins read

Kenya faces a growing risk of debt distress within the Sub-Saharan African region, primarily driven by the continuous expansion of its public debt amid a challenging macroeconomic environment.

As of June 2023, Kenya’s public debt, according to the Central Bank, stood at Kshs 10.2 trillion, equivalent to 70.2% of its GDP. This marked an 18.8% increase from the KES 8.6 trillion, representing 66.2% of GDP, recorded in June 2022.

The Kenyan government has undertaken various measures to alleviate its debt burden, including widening the tax revenue base and reducing non-priority expenditures. However, these efforts have been hindered by inflationary pressures stemming from increased fuel prices, aggressive currency depreciation, and sluggish economic growth.

The composition of Kenya’s public debt has also evolved over time, with the share of multilateral debt in the country’s external debt increasing by 5.6% to 50.4% in June 2023, compared to 44.8% in a similar period in 2022.

RELATEDPOSTS

Why firms are shedding jobs despite survival

June 19, 2025

Opinion: Austerity wrong medicine for Kenya’s economy.

June 16, 2025

This shift can be attributed to loans amounting to USD 1 billion (KES 138.6 billion) from the World Bank and USD 415.4 million (KES 58.9 billion) from the IMF for budgetary support. Notably, a significant portion of Kenya’s external debt is denominated in US Dollars, exacerbating the cost of servicing the debt due to the continuous depreciation of the Kenyan shilling against the US Dollar.

The elevated debt level carries negative implications for the Kenyan economy, including increased costs associated with servicing the debt due to foreign currency obligations in light of the weakening local currency. This, in turn, results in higher taxation as the government seeks to meet its debt commitments.

Another consequence is the heightened cost of raising additional funds, as reflected in rising Eurobond yields, as lenders demand higher interest rates for new loans, given the elevated credit risk. This dynamic stifles private sector activities and economic growth.

Furthermore, high levels of debt often constrict fiscal space, limiting resources available for vital infrastructure and capital expenditure, as the government allocates a significant portion of its resources to debt servicing. To mitigate these challenges, Kenya must prioritize fiscal consolidation and debt sustainability to avert the risk of loan default and promote economic recovery.

Previous Post

Why you need title insurance when buying real estate in Kenya

Next Post

Kenyan real estate prices skyrocket thanks to diaspora capital

Duncan Muema

Duncan Muema

Related Posts

News

Private vs Public Pension Funds in Kenya

June 27, 2025
Investments

Investor shift to long term bonds drives oversubscription in CBK’s reopened auction

June 19, 2025
News

The real price of Israel – Iran Conflict for Kenya.

June 19, 2025
Economy

Resilient but strained: Kenyan firms speak out in May 2025 CEO survey.

June 19, 2025
News

Co-op Bank posts KES 6.9 billion profit in Q1’2025

May 16, 2025
Agriculture And Economy
News

Lets get Kenya out of FATF list

May 9, 2025

LATEST STORIES

Private vs Public Pension Funds in Kenya

June 27, 2025

The mechanics of currency manipulation

June 27, 2025

Understanding how to access your pension savings in Kenya.

June 27, 2025

What happened to president Ruto’s economic dream?

June 27, 2025

Opinion: Populism feeds votes, not growth

June 27, 2025

Competitive advantages of small businesses

June 26, 2025

Opinion: Invest in sports for national prosperity

June 26, 2025

Ethiopia’s access to Eritrean ports is a game-changer for trade

June 26, 2025
  • About Us
  • Meet The Team
  • Careers
  • Privacy Policy
  • Terms and Conditions
Email us: editor@thesharpdaily.com

Sharp Daily © 2024

No Result
View All Result
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team

Sharp Daily © 2024