NAIROBI, Kenya, Feb 23 – Controller of Budget Margaret Nyakang’o has raised concern over the country’s growing interest rates on debt.
Nyakang’o, who was appearing before the Public Debt and Privatization Committee chaired by Mbalambala lawmaker Abdi Omar Shurie yesterday, told parliamentarians that the nation paid more on its recently issued $1.5 billion Eurobond.
The auditor went on to say that the interest rate of 10.37 percent applied to the recently bought-back debt was higher compared to the 6.87 percent the 2014 bond offered.
She added that refinancing does not solve the country’s current problems but rather postpones them to later dates, making the loans expensive in the long run.
“While interest rates have shot up everywhere over the last couple of years, a double-digit borrowing cost remains one of the most obvious warning signs that all is not well in our country. Kenya was compelled to refinance at a higher interest rate to offset the $ 2 billion bond (sh 292,000,000,000) payment looming in June 2024,” said Nyakango.
She called for the auditing of the concessional loans given to Kenya by multilateral agencies such as the International Monetary Fund (IMF) to measure their effectiveness.
Her sentiments were also echoed by Auditor General Nancy Gathungu, who lamented Kenya’s overreliance on Eurobonds for financing, adding that they were unsustainable in the long run.
“Kenya’s reliance on Eurobond has raised concerns about debt sustainability. There is heightened vulnerability in 2024 which coincides with Eurobond maturities,” she noted.
