NAIROBI (Reuters) - Kenya’s risk of defaulting on debt repayments has increased to moderate from low, the International Monetary Fund (IMF) has said, citing the government’s public investment drive and revenue shortfalls in recent years.
The Washington-based lender forecast Kenya’s total public debt will reach 63.2 percent of economic output or GDP this year then begin declining. Public debt was 58 percent last year and 53.2 percent in 2016.
“The higher level of debt, together with rising reliance on non-concessional borrowing, have raised fiscal vulnerabilities and increased interest payments on public debt to nearly one fifth of revenue, placing Kenya in the top quartile among its peers”, the IMF said in a report released late on Tuesday.
The government led by President Uhuru Kenyatta, who was re-elected last year, began in 2016 to pour billions into infrastructure projects, including a Chinese-built railway. In his second and final term, Kenyatta has said his government will focus on manufacturing and public housing.
The IMF recommended Kenya’s Treasury refinance loans at longer maturities to limit refinancing risks.
Reporting by Maggie Fick; Editing by George Obulutsa and David Holmes