As a result of Kenya’s public investment drive and revenue shortfalls in recent years, the International Monetary Fund (IMF) said the country’s risk of defaulting on debt repayments has increased to moderate from low.
According to the IMF, Kenya’s total public debt will reach 63.2 percent of economic output or GDP this year, but will begin declining. The country’s public debt was 58 percent last year and 53.2 percent in 2016.
A report released by the Washington-based lender said “the higher level of debt, together with rising reliance on non-concessional borrowing, have raised fiscal vulnerabilities and increased interest payments on public debt to nearly one fifth of revenue, placing Kenya in the top quartile among its peers”.
The government led by President Uhuru Kenyatta, who was re-elected in 2017, said his government will focus on manufacturing and public housing. In 2016, the Kenyan President began pouring billions into infrastructure projects, including a Chinese-built railway.
The International Monetary Fund recommended that Kenya’s Treasury refinance loans at longer maturities to limit refinancing risks.