The World Bank has raised concerns over Kenya’s growing external borrowing, warning that it may affect the country’s ability to sustain its debt.
The global institution says Kenya might experience difficulties in servicing Sh2.7 trillion debt, with the government required to spend Sh365 billion in 2019 as part of the loan repayment.
The Washington-based international bank further warns that Kenya could drain 50 percent of the dollar reserves currently being held by the Central Bank of Kenya (CBK) in the process of meeting loan obligations.
Depletion of dollar reserves leads to a country’s inability to import key products such as petroleum thus crippling the economy.
“In the future, higher debt service payments, in part due to bullet repayments falling due on maturing international bond issues, coupled with rising global interest rates… exacerbating concerns about debt sustainability,” says the World bank as quoted by the Standard.
The World Bank notes that Kenya is among African countries that are at high risk of defaulting on their external loans.
“Many countries across the region will see future debt service payments rise steeply, or remain elevated, over the next two to five years: Ethiopia, Ghana, Kenya, Senegal, and Zambia are illustrative,” The World Bank adds.
The World Bank says Kenya’s annual exports, which are one of the main sources of dollars, have reduced and only covered less than a third of the foreign debt.
It also notes that Kenya is looking for another Eurobond, which could further put the country at high risk of defaulting on its loans.
In a recent interview, President Kenyatta dismissed concerns over Kenya’s huge debt, saying his government will continue borrowing.
“I will continue borrowing. We don’t borrow to consume but for development of infrastructure,” President Kenyatta said last week.
Bullcrap World bank.Usa n…
Bullcrap World bank.Usa n Australia has defaulted few times how come u never insisted that their economy will collapse n don’t argue they r first world juu we know who controls world bank??Japan has borrowed over 100% against their gdp??Colonialist empoverished world bank who don’t want to see progress in the so called poor nation relax n wait for us to default then u can yap yap as usual.The western nation have borrowed heavily for its infrastructure to b where they are today n i support uhuru when he says he will borrow to fix its infrastructure because the economy will grow opening opportunities in entire country then if the taxes r collected wisely we should b able to repay this loans so again mr world bank shallap n watch the African states rising especially my mother kenya.Bring yr interest down then we will borrow from you the way we borrowing from Exim bank of china n African development bank?World bank with yr stupid stricter conditions when a country is borrowing many countries will stay away from you.
The borrow and loot policies…
The borrow and loot policies of Jubilee are a threat Kenya as a country. Thanks World Bank for highlighting the unsustainable path the boy in statehouse is putting the country on. What part of exports can only cover a third of the foreign debt that is in dollars does he not understand?