Cupboard Secretary, Nationwide Treasury & Financial Planning Njuguna Ndung’u on Might 17, 2023. PHOTO | DENNIS ONSONGO | NMG
The federal government spent greater than half a trillion shillings to service money owed within the first two months of this yr, even because it stays with a bigger burden of repaying greater than Sh700 billion within the 4 months to June.
Newest knowledge from the Nationwide Treasury exhibits that in January and February, authorities spending on public debt was Sh560 billion.
The Treasury, within the replace on authorities revenues and exchequer points for eight months beginning July 2023 to finish of February 2024, notes that complete points in direction of public debt service hit Sh1.157 trillion by finish of February.
This was a pointy soar from the Sh597 billion that the Controller of Funds (COB) reported as expenditure on public debt service, between July and finish of December 2023.
A part of the heavy spending on public debt service is the Sh210 billion ($1.44 billion) the federal government used for partial early redemption of the $2 billion (Sh266.5 billion, at present trade charges) Eurobond that was due in June, because the Treasury sought to rebuild traders’ confidence that Kenya wouldn’t default on the debt.
The Treasury in February went to the Eurobond market and borrowed $1.5 billion that shall be due in 2031, which was used to settle a part of the 2014 Eurobond.
“The proceeds from the 2031 Eurobonds will fund the provide to purchase Kenya’s present $2 billion Eurobonds due in 2024, pending demand within the tender provide,” Treasury Cupboard Secretary Njuguna Ndung’u mentioned in February.
The CS mentioned the 2031 Eurobonds would “smoothen the maturity profile” of the Eurobonds maturing in June this yr.
“The remaining portion of the 2024 Eurobonds not bought within the tender provide shall be funded by way of a mixture of authorities funds and financing from multilateral and bilateral sources, together with financial institution syndication,” Prof Ndung’u mentioned.
Whereas Sh210 billion was used in direction of settlement of the Eurobond, the general spending of Sh560 billion on public debt service for the 2 months exhibits the federal government spent an additional Sh350 billion on debt service throughout the two months.
General, the quantity the Treasury has launched in direction of public debt service throughout the eight months is greater than half (51.8 p.c) of all of the monies it launched to facilitate operations of the nationwide authorities.
The quantity can also be 5.6 occasions the Sh206 billion the Treasury launched to all of the 47 counties as their equitable share of revenues throughout the interval.
The spending on public debt service throughout the eight months can also be greater than the complete quantity — Sh1.153 trillion — the Treasury spent on paying public money owed over the last monetary yr (2022/23).
Through the present yr ending June, the federal government is predicted to spend Sh1.866 trillion on servicing money owed. That is after the general public debt service price range was revised within the supplementary price range from Sh1.75 trillion initially.
