Kenya’s Debt Reduces by Ksh1 Trillion After Drop in Exchange Rate – CBK

Kenya’s overall debt has reduced significantly following the reduction of the exchange rate between February and March 2024.

Speaking during the Monetary Policy Committee (MPC) meeting on Thursday, March 4, Central Bank of Kenya (CBK) Governor Kamau Thugge revealed that Kenya’s debt levels were reduced by Ksh1 trillion.

He noted that the drop was significant given that the dollar had shed close to Ksh30 within the last few months.

The drop was also witnessed given that dollars dominate most of the debt owned by Kenya to the external market.

CBK Governor Kamau Thugge speaking at the Africa Climate Business Forum on November 2, 2023.


Central Bank of Kenya

“We estimate that we have reduced the shilling-denominated dollar debt by Ksh1 trillion. Consider that our external debt is around USD38 billion and we have reduced the exchange rate from around Ksh160 to Ksh130. That is around Ksh30,” Thugge explained.

Further, he credited the recent gains made by the shilling to Kenya’s activity in the Eurobond market in February.

At the time, the shilling was depreciating rapidly given that there were concerns about whether the country would be able to meet its debt obligations and pay off the USD2 billion Eurobond that is due in June.

“That transaction that we did with the Eurobond which removed the risks has actually saved the country huge amounts of debt and when you see the overall debt you should see a reduction in terms of shillings,” he stated.

As of January, Kenya’s debt was slightly over the Ksh11 trillion mark. Therefore, with the drop, the overall debt should have been reduced to Ksh10 trillion.

Notably, the ballooning debt had also been credited to the depreciation of the shilling for the better part of 2023 and January 2024.

“Overall, the National Government’s external debt stock increased by Ksh100.38 billion from Ksh6.08 trillion at the end of December 2023 to Ksh 6.18 trillion at the end of January 2024.

“This was attributed to disbursements made during the month and the depreciation of the Kenya shilling against major currencies,” Treasury noted in its monthly bulletins for January 2024.

Most of Kenya’s outstanding debt is owed to multilateral financial institutions such as the International Monetary Fund (IMF). Among foreign countries, the majority of the debt is owed to China.

President William Ruto meeting with representatives of IMF at State House on November 13, 2023.


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