Location via proxy:   [ UP ]  
[Report a bug]   [Manage cookies]                
Scribd Logo
Upload

Welcome to Scribd!

  • 15 views

    1.0 Kenyas Public Debt Dr. Abraham Rugo

    Uploaded by

    REJAY89

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    1.0 Kenyas Public Debt Dr. Abraham Rugo

    Uploaded by

    REJAY89
    15 views17 pages

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    15 views17 pages

    1.0 Kenyas Public Debt Dr. Abraham Rugo

    Uploaded by

    REJAY89

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 17

    Kenya’s Public Debt – Should we

    be Concerned?

    Abraham Rugo Muriu, PhD


    Country Manager-IBP Kenya

    Uphold public interest


    Outline

    • What we know

    • What we do not know

    • What should concern us

    • What this means?


    Kenya relies heavily on
    borrowing
    • Public debt is a means to plug in budget
    deficits ( 18/19 at 6.3 per cent of GDP)

    • To be able to invest today for returns


    tomorrow…but are the returns assured?

    • As of June 30th, 2019, Kenya’s total debt stock


    stood at Ksh 5.80 trillion equivalent to about 61
    percent of our total gross domestic product
    (GDP).
    Fiscal Deficit is key Driver
    Debt Mix is Changing
    Share Domestic and External Debt Between 2012/13 and 2017/18
    58.0%
    55.5%
    56.0%
    54.0% 53.0%
    52.1%
    52.0% 50.9%
    50.3%
    50.0%
    50.0%
    50.0% 49.7% 47.9%
    48.0% 47.0% 49.1%

    46.0% 44.5%
    44.0%
    42.0%
    40.0%
    2012/13 2013/14 2014/15 2015/16 2016/17 2017/18
    Domestic Debt External debt
    External Commercial is main
    source of debt
    Debt service is our key
    expenditure
    Figure 2: Share of Debt Service Between Domestic and External Repayment
    80% 76% 74%
    72%
    69% 69%
    70%

    60% 55%

    50%
    45%

    40%
    31% 31%
    30% 28%
    24% 26%

    20%

    10%

    0%
    2011/12 and 2012/13 2012/13 and 2013/14 2013/14 and 2014/15 2014/15 and 2015/16 2015/16 and 2016/17 2016/17 and 2017/18
    Total External Debt Service Total Domestic Debt Service
    Linear (Total External Debt Service) Linear (Total Domestic Debt Service)
    External Debt service is
    Erratic
    Figure 3: Growth in External and Domestic Debt Service
    200%
    174%

    150%
    131%

    100%

    50% 34%
    18% 24% 23%
    22%
    12% 17% 13%
    8%
    0%
    2011/12 and 2012/13 and 2013/14 and 2014/15
    -31% and 2015/16 and 2016/17 and
    2012/13 2013/14 2014/15 2015/16 2016/17 2017/18
    -50%

    Total External Debt Service Total Domestic Debt Service


    Erratic nature of both principal
    and interest servicing
    What we do not know
    • The full extent and conditions attached to
    the various loans

    • The prudent utilization of the loan proceeds

    • The return on investments from the debt and


    how we shall pay in the future

    • The equity with which the resources are


    applied across the country
    What must concern us/1
    Debt service to revenue ratio is very high and the BPS 2018 estimates it
    was higher than the threshold of 30 percent in 2017 at 36 percent. That
    level of performance remains high going into 2019.
    What must concern us/2
    Allocations to debt service are rising at a much faster rate than the growth in
    ordinary revenue excluding Appropriation in Aid (AIA). Since 2014/15, the
    average growth in ordinary revenue has been 13 percent while the average
    growth in debt service has been more than twice that rate at 30 percent.
    What must concern us/2
    Figure 4: Total Debt Service as a % of Revenue
    40.0%

    35.0% 33.8%

    30.0%

    24.5%
    25.0% 23.6%
    21.8%

    20.0% 18.6%
    17.5%
    16.5%

    15.0%

    10.0%

    5.0%

    0.0%

    2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18


    What must concern us/3
    As debt service grows from one year to the next the allocations to counties have
    been dropping. In addition, the sharable revenue has also not grown by much.
    What does this mean
    • We are financially risky…moved from low to
    moderate risk

    • Growth in debt repayment means there is less and


    less for discretionary spending

    • The fairness principle in a case where investments


    are not feasible is negated

    • Austerity now. Real fiscal consolidation. Tough


    choices ahead before we plunge under.
    Discussion

    • From where you seat, how does this manifest?

    • What can you do?

    • Is there hope? And will you be the hope


    ambassador?
    Interactive Session

    You might also like