Serrari Group

Kenyan Treasury Dedicates Sh560 Billion to Debt Service in Two Months

The National Treasury of Kenya has disclosed that the government allocated Sh560 billion towards debt servicing in the first two months of the year. This expenditure is part of the broader effort to repay over Sh700 billion within the next four months, leading up to June.

Data from the National Treasury reveals that between January and February, disbursements for public debt totaled Sh560 billion. By the end of February, the total disbursements towards debt service reached Sh1.157 trillion.

A significant portion of this allocation, Sh210 billion, was directed towards the partial early redemption of a $2 billion Eurobond. This move aimed to reinforce investor confidence and mitigate default risks.

In February, the Treasury secured $1.5 billion from the Eurobond market, intended for repayment in 2031. These funds were used to settle a portion of the 2014 Eurobond, smoothing the maturity profile of debts maturing in June.

Despite allocating Sh210 billion for the Eurobond settlement, the total spending of Sh560 billion on debt service for the two months reflects an additional disbursement of Sh350 billion during this period.

The Treasury’s disbursements towards debt service in the eight months accounted for over half (51.8 percent) of all funds allocated for national government operations. This is in contrast to the Sh206 billion disbursed to all 47 counties during the same period.

As the financial year nears its end in June, the government’s expenditure on debt service is projected to reach Sh1.866 trillion, following revisions in the supplementary budget from the initially allocated Sh1.75 trillion.

This disclosure underscores the significant financial commitment required for debt servicing in Kenya and highlights the importance of prudent financial management for sustainable economic stability.

photo source Google

By: Montel Kamau

Serrari Financial Analyst

21st March, 2024

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