Kenya has been reduced into a borrowing nation with public debts ballooning with each coming day and the common mwananchi feeling the heat.
There is fear that the port of Mombasa might be going to the Chinese following the billions of shillings we owe them in form of loans, most of which have matured.
Kenya is currently serving the more than 300 billion shillings from China that were used to construct the Standard Gauge Railway (SGR) which in the one year of operations, gave the government one billion shillings in revenues.
In 2018/2019 budget, the Treasury has allocated 962.52 billion shillings to the Consolidated Fund. This is mandatory expenditure and constitutes the first charge under the Consolidated.
Public debt repayments are at 870.62 billion shillings in FY2018/19 representing a 25.79 percent, a 3- year CAGR from FY2015/16 (437.46 billion shillings).
The jump in public debt repayment is hardly surprising keeping in mind public debt stock has nearly doubled above 4 trillion shilling mark in three fiscal years.
This will lead to a worsening in the debt service-to-revenue ratio from 40.13 percent (as per initial FY2017/18 estimate) to 51.56 percent in FY2018/19, exceeding the 30.00 percent debt sustainability threshold
Interest payments will grow 31.11 percent y/y to 399.98 billion shillings while redemptions will increase 36.7 percent y/y to 470.63 billion shillings.
The external debt redemptions will feature significant maturities in Standard Chartered syndicated loan (78.74 billion shillings) and 5-year debut International Sovereign Bond (78.30 billion shillings).
Overall, public debt redemptions will comprise 54.06 percent of total public debt obligations in FY2018/19. The other marked rise in Consolidated Fund Service is pensions and gratuities (19.97 percent y/y) to 86.25 billion shillings attributed to new wage demands, changes to civil servant remuneration and gratuity to the military due to better service terms.
Whether the government plans to tame the expanding public debt or not, something urgent needs to be done or what International Monetary Fund (IMF) has been predicting all along will happen.