Kenya’s total external debt has surged to KES 6.1 trillion, marking a substantial increase of approximately 30% from KES 4.7 trillion in 2022 according to a recent Treasury report.
This growth in debt, reaching KES 6 trillion in 2023, is primarily attributed to the depreciation of the shilling coupled with increased disbursements from financial institutions to the country.
Over half of Kenya’s multilateral foreign debt is owed to the Bretton Woods institutions, namely the World Bank and the International Monetary Fund (IMF), which experienced a remarkable 38% surge, reaching KES 2.2 trillion in 2023.
The proportion of World Bank and IMF debt in relation to the nation’s multilateral loans amounted to 72%. Furthermore, the report highlights that the outstanding debt from Eurobonds surpassed KES 1 trillion, reaching KES 1.1 trillion by the end of 2023.
Bilateral loans from China saw a significant increase, with Kenya’s debt to China rising by 16% to KES 939 billion in 2023 from KES 810 billion in 2022.
Domestic debt, constituting 45% of the total debt, grew by 11% to KES 5 trillion in 2023 from KES 4.5 trillion in 2022. This growth was primarily driven by an increase in long-term securities (T-Bonds) by KES 46.9 billion, bringing the total to KES 4.3 trillion. Conversely, short-term securities (T-Bills) decreased by KES 8.7 billion, totaling KES 546.9 billion.
The recent strengthening of the shilling against the dollar provides optimism regarding the potential reduction of future external debt denominated in US dollars, considering that 67.3% of Kenya’s external debt is USD denominated.
