In the first two months of this year, the Kenyan government spent over half a trillion shillings to repay debts, with a looming burden of over 700 billion shillings due by June.
According to the latest data from the National Treasury, government spending on public debt in January and February alone amounted to 560 billion shillings. This marked a significant increase from the previous six months, during which 597 billion shillings was spent on debt servicing.
A notable portion of this expenditure was the 210 billion shillings used for the early redemption of a 2 billion dollar Eurobond that was due in June. The government aimed to bolster investor confidence by showing its commitment to debt repayment.
Additionally, in February, the Treasury borrowed 1.5 billion dollars from the Eurobond market, which will mature in 2031. These funds were utilized to settle part of the 2014 Eurobond.
Treasury Cabinet Secretary Njuguna Ndung’u explained that the issuance of the 2031 Eurobonds would help in managing the maturity profile of debts due in June.
Despite the focus on settling the Eurobond, the overall spending on debt servicing for the two months totaled 560 billion shillings, indicating an additional 350 billion shillings spent during this period.
Overall, the Treasury has allocated more than half of its funds towards debt servicing, surpassing the amounts allocated to county governments and exceeding the total debt servicing expenditure of the previous financial year.
The government is expected to spend approximately 1.866 trillion shillings on debt servicing by the end of the current financial year in June.
