This week, the National Treasury unveiled its annual borrowing plan for the financial year 2024/2025, with Cabinet Secretary John Mbadi expressing confidence in a projected growth rate of 5.5 percent for the Kenyan economy.
This optimistic forecast suggests that Kenya’s economy will maintain stability in the medium term, despite rising global geopolitical tensions, including conflicts in the Middle East and the ongoing war between Russia and Ukraine.
“Despite these global challenges, we expect Kenya’s economy to remain stable in the medium term. For the fiscal year 2024/25, we project a real economic growth rate of 5.5%. This positive outlook stems from strong performance in the service sectors, continued growth in agriculture, and improved export activity,” Mbadi stated.
However, the Cabinet Secretary cautioned that this favorable outlook is vulnerable to risks, particularly erratic weather patterns.
The Annual Borrowing Plan indicates that total public debt reached Kes. 10.56 trillion (65.5 percent of GDP) by the end of June 2024. This debt consists of Kes. 5.41 trillion in domestic debt (33.5 percent of GDP) owed to commercial banks and local lenders, alongside Kes. 5.15 trillion in external debt (32.0 percent of GDP).
As of June 2024, total disbursements from borrowing amounted to Kes. 760.5 billion, including Kes. 155.8 billion in project loans, Kes. 317.8 billion in program loans, and Kes. 286.9 billion in commercial loans. During this review period, Kenya reported principal repayments totaling Kes. 537.8 billion.
Given these figures, the government plans to borrow more this financial year, facing a projected deficit of Kes. 768.6 billion. The Treasury aims to secure Kes. 355.5 billion from external lenders and Kes. 413.1 billion from domestic sources.
President William Ruto’s administration noted that most of the borrowed funds will focus on servicing existing debts and stabilizing the economy.
