In its Draft 2023 Budget Review and Outlook Paper, the National Treasury says that the country’s debt service-to-revenue ratio will breach the 18 percent threshold in 2024 (24.9), 2025 (18.2), and 2026 (19.2).

It links the high debt service to the revenue ratio in 2024 to the maturity of the international sovereign bond.

“The debt sustainability analysis shows that Kenya’s public debt remains sustainable as a medium performer in terms of debt carrying capacity,” Treasury said.

“However, there is a high risk of debt distress as a result of global shocks leading to a slowdown of economic growth.”

The government borrowed a total of Sh985.7 billion in the financial year 2022/23, comprising project loans of Sh137.6 billion, programme loans of Sh266.9 billion, commercial borrowing of Sh102.2 billion, use of IMF SDR allocation of Sh42.8 billion, and domestic securities of Sh437.5 billion.

It went on loan-funded projects of Sh136.2 billion, external redemptions of Sh237.4 billion, and domestically funded development.

“To reduce debt vulnerabilities, the Government has committed to a fiscal consolidation program and optimising the financing mix in favour of concessional borrowing to finance capital investments,” the draft document added.

“Additionally, a steady and strong inflow of remittances and a favourable outlook for exports will play a major role in supporting external debt sustainability.”