NAIROBI (Xinhua) --
Economic analysts on Thursday cautioned Kenya on its rising public
debt burden that has risen from a debt to Gross Domestic Product
(GDP) ratio of 36.6 percent in 2006 to 50 percent in 2016.
Institute of Economic Affairs (IEA) CEO Kwame Owino told a business
forum in Nairobi that Kenya plans to spend 6.2 billion U.S. dollars
in debt repayment for the 2017/2018 financial year, up from the 4.6
billion dollars allocated for the current financial year that ends
"Kenya should slow down its borrowing to ensure that its public
debt stock remains sustainable and does not affect macroeconomic
stability," Owino said during a roundtable forum on budget analysis
for the 2017/2018 financial year budget.
Kenya has a budget of 26 billion dollars against revenues of 17
billion dollars. The gap of nine billion dollars will be bridged
through a mix of domestic and foreign borrowing.
Owino said interest payment on loans has been rising and risks
getting out of line.
According to IEA, the country’s increasing appetite for domestic
borrowing, especially short term commercial debt could have an
effect on destabilizing local interest rates.
The analysts noted that lack of fiscal discipline through
increased borrowing may push up interest rates and in the process
crowd out private sector lending and end up affecting macroeconomic
However, Owino lauded Kenya’s move to float a mobile government
bond dubbed the M-Akiba to retail investors.
The CEO said that M-Akiba will help diversity sources of public
"It will also put pressure on local banks to reduce their
interest rates as they try to compete for loan business," he noted.