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Arrears on payments to contractors and suppliers have risen by 8% this year
Treasury Secretary Ukur Yatani may have gained a bit of breathing room via a $2.4 billion programme with the IMF in May, and a fourth Eurobond issue worth US$1bn in June, but mounting arrears and debt burden are prompting concern among analysts in Nairobi.
Nifty accounting work saw Yatani keep $9bn in loan redemptions off the official debt total in his June budget statement, and the practice appears to be spreading. The Treasury admitted this week that Kenya's total debt has grown by at least $4bn since March, and another Treasury report said arrears on payments to contractors and suppliers increased 8% in the year to June. The pending bills, including unfulfilled statutory payments to pension funds, come to 359.5bn shillings ($3.3bn).
In his budget statement for the 2021/22 fiscal year, Yatani forecast that Kenya's budget deficit will fall slightly to 7.7% of GDP from 9.0% (AC Vol 62 No 13, Banking on a fast recovery). Kenya is seeing another increase in Covid-19 cases, prompting the extension of already tight curfews and travel restrictions in Nairobi and neighbouring counties. That means little prospect of an early recovery of tourism.
The Parliamentary Budget Office notes that the government's debt burden has now been pushed up to 69% of GDP and 87% of the KSh9 trillion ($90 billion) total debt ceiling.
The indications are that Yatani has accepted that debt will continue to increase in the medium term. Having increased the debt ceiling twice since taking his ministerial post in 2019, Yatani is now seeking parliamentary approval to move the debt ceiling up to KSh12trn (AC Vol 62 No 14, Digging deeper into debt).
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