NAIROBI (Reuters) - Kenya’s public debt is sustainable at 46 percent of gross domestic product (GDP) because much of it is supporting transport and other projects that will fuel growth, the head of the central bank said on Tuesday.
The east African nation raised $2 billion in June from a debut Eurobond issue, building on a domestic issuance programme that has seen it offer 30-year bonds and specialist instruments to fund new infrastructure, such as roads and railways.
Analysts have said that a debt rate rising above 45 or 50 percent of economic output would put more pressure on Kenya’s government to rein in spending.
“The government is borrowing to roll out public investments,” Njuguna Ndung’u told Reuters on the sidelines of meeting on debt sustainability, without giving a figure for total borrowing.
“Those public investments give the country and the economy capacity for future growth so it improves sustainability in the future so we don’t have a threat.”
Debt had been estimated at more than 50 percent of GDP until September, but that rate fell after Kenya rebased its economy, estimating GDP at 25 percent bigger than previously thought.
$1 = 90.1000 Kenyan shilling