The Central Bank of Kenya (CBK) says the country’s debt has dropped by Ksh 1 trillion on account of strong shilling and investor optimism.
According to CBK Governor Dr Kamau Thuge, the Kenyan currency has gained more value over the US dollar after the country managed to offset the $1.5 billion Eurobond debts in February.
A combination of feeble shilling and worsening balance of payment created a cocktail of crisis in Kenya’s fiscal space increasing overall public debt by Ksh 1.93 trillion as of December 2023.
This saw the total stock of public debt jump to record levels of Ksh 11.1 trillion, raising concerns over the country’s debt sustainability.
However, investor nerves were calmed in January when the government settled the Eurobond debt that was due on February, 10.
This has managed to stem a steady slide of the Kenyan shilling, which was trading at 160.1 against the US dollar.
Dr Thugge says the Kenya shilling is now trading at 130, and the regulator expects the local currency to continue with its value correction in the coming weeks.
Thursday, the shilling closed the trading day at 131 against the Dollar.
The CBK governor is also raising concerns over the rise in non-performing which has breached the 15pc mark, for first time in over a decade.
Banks have seen a surge in bad loans due to the economic meltdown.
The governor noted that Kenya expects a disbursement of $1 billion from the International Monetary Fund (IMF) to boost foreign reserves, which stands at 3.77 months of import cover.
