The Institute of public Finance projects the country is at risk of debt distress owing to the nose diving shilling against the dollar and the consequences of repaying the Eurobond loan in lump sum.
Data from the Institute of Public Finance’s (IPF’s) Macro Fiscal Analytical Snapshot Report shows that the country finds itself in a tight spot following years of successive borrowing, coupled with the inability of the private sector to create sufficient jobs for millions of young people entering the job market annually.
Speaking to the media, IPF Chief Executive officer James Muraguri said for Kenya to maintain robust economic growth, it must put in place the necessary fiscal levers to promote faster private-sector-driven growth.
“Revenue optimism has been a persistent problem in Kenya for several years which in the past has tended to result in higher-than-planned fiscal deficits financed by additional borrowing,” Muraguri said.
“More recently, rising global interest rates and a subsequent decline in inward foreign investments have caused the Kenyan shilling to depreciate steeply, significantly increasing the cost of external debt servicing and further putting pressure on Kenya’s foreign exchange reserves,” he added.