The share of loans provided by the World Bank and the International Monetary Fund more than doubled to a record 43.3 percent of foreign loans, strengthening the hands of the two institutions in influencing economic policy in Kenya.
Treasury documents revealed that loans to the Bretton Woods institutions increased from Sh654 billion in June 2019 to Sh2.2 trillion in June, with the Chinese continuing to reduce.
This has led to its share of loans growing from 21.8% in 2019 in a period that saw the World Bank and IMF influence policy directives such as new taxes, a freeze on non-essential government hiring and public sector reforms. Loan growth and from Western-backed lenders that China – Kenya’s largest lender by far – ending the lending craze for emerging countries.
China’s loan to Kenya decreased by Sh218.17 billion to Sh736.19 billion as a result of earlier debt repayments and reduced lending from Beijing.
The Treasury Department notes in its Annual Public Debt Management Report 2023/2024 that “the share of multilateral debt rose to 53.9% in fiscal year 2023/2024. This is due to the government’s strategy to maximize concessional financing and reduce risks.”
At the end of October 2024, the IMF Board approved the seventh and eighth review, paving the way for the cash-strapped government to obtain $606 million.
“The EFF/ECF arrangements are intended to support Kenya’s program to address debt vulnerabilities, while conserving resources to meet priority social and development needs; building resilience to shocks; improving governance and transparency; and supporting reforms.” broader economic potential to realize the country’s potential in the medium term.
Notably, Kenya’s debt servicing as a percentage of regular revenue reached 68.3 percent, up from 58.8 percent in 2022/23. This means that for every Sh100 collected in taxes, Sh68.3 went to debt servicing. The bulk of multilateral debt, which represents the largest share of external debt, rose to 53.9 percent from 48.7 percent.
According to the report, Eurobonds outstanding at the end of 2023/24 amounted to Sh853.78 billion. Other lenders to Kenya that recorded significant growth in one year are the International Monetary Fund (71.8 percent) and the Asian Development Bank (11.2 percent).
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