By Judy Maina
NAIROBI – Kenya’s debt remains sustainable in the medium to long term, bolstered by sustained policy actions and anticipated robust export growth, the Central Bank of Kenya (CBK) reported on Friday in its quarterly economic review.
The report, covering the period ending in March, highlighted improvements in the country’s debt burden indicators, attributed to stronger fiscal efforts.
Despite these gains, the overall and external risk ratings for debt distress remain elevated, the CBK noted.
The analysis indicated that Kenya’s debt sustainability is vulnerable to shocks in export performance, exchange rates, and primary balance.
“In view of this, efforts aimed at boosting exports and revenues would strengthen external debt sustainability,” the Central Bank stated.
The bank emphasized that the country’s exports to Africa have been increasing, with the value of goods exported reaching $1.81 million in the first quarter of 2024, marking a new high.
As of the end of March, Kenya’s public and publicly guaranteed debt stood at Ksh10.3 trillion ($79.3 billion), accounting for 67 percent of the gross domestic product.
Domestic debt constituted 50.3 percent of the total, while the remaining external debt was primarily denominated in dollars and euros.
The CBK reported that Kenya fully repaid its $2 billion Eurobond debt before the June 24 deadline.
In a proactive move to mitigate the risk of default, Kenya raised $1.5 billion through a Eurobond buyback offer in February.
This initiative was part of a broader strategy to manage the country’s debt obligations more effectively.
The CBK’s report underscores the importance of continued fiscal prudence and strategic economic policies to maintain debt sustainability, particularly in the face of external economic pressures.
The writer of this story can be reached at: judy.maina@alleastafrica.com
