Economy

Public debt piles up as Treasury signs for Sh90bn in 3 months

treasury

The National Treasury building in Nairobi: The World Bank has previously said that Kenya's debt load is racing toward the danger zone. PHOTO | FILE

Foreign debt amounting to Sh90.23 billion has been signed by the government in the three months to January. Most of the cash is for infrastructure.

Data tabled in Parliament on Tuesday shows that the country had signed nine loan agreements.

They include Sh39.2 billion from the African Development Bank “for clean water” and a Sh25 billion commercial loan from PTA Bank “for infrastructure financing.”

The Sh39.2 billion will go to the Kenya Towers Sustainable Water Supply and Sanitation.

Kenya’s total public debt hit Sh3.6 trillion in the year to June 2016, an increase of 27 per cent from the Sh2.8 trillion at the end of June 2015.

READ: Treasury data shows public debt increase to Sh3.6trn in June

The Treasury has consistently held that Kenya’s public debt is sustainable despite slow growth in the Kenya Revenue Authority’s tax collection.

The World Bank however says the debt load is racing toward the danger zone.

The report also shows that the country borrowed Sh20 billion from China Exim Bank to upgrade the Kibwezi-Mutomo-Kitui road whose construction President Uhuru Kenyatta launched a few months ago.

Another Sh1.4 billion was borrowed for the last mile electricity connection. The Jubilee administration is determined to connect 70 per cent of Kenyans to electricity countrywide.

READ: China’s repayment hits 42pc of Sh15.5bn foreign debt bill

ALSO READ: Treasury expects Sh100bn in loans by end of March

President Kenyatta two years ago launched the provision of electricity to primary schools the number now connected is 20,575 from 8,203 in 2013.

The cost for installation was also reduced from Sh35,000 to Sh15, 000 to speed connectivity.

Households living within 600 meters of electricity transformers, but who cannot pay the Sh15,000 at one go, get connected and pay in instalment in their bills.

The Treasury has taken a Sh1.24 billion loan from the Belgian Government the third phase of county information communication connectivity project.

The plan is to improve connectivity of ICT services in all the 47 counties.

Kenya further signed two loans totalling Sh1.4 billion from Belgium’s KBC bank to finance phase III A and B of the private national wide governmental network with voice data.

This is intended to improved connectivity to ICT services within the country, the Treasury document says.

The Treasury also borrowed Sh523.3 million from the African Development Bank to improve to ease of movement of goods, services and people in Lake Victoria.

The funding will finance the Multinational Lake Victoria Maritime and Transport project.

Out of the Sh90.23 billion external borrowing that was signed between October 1, 2016 and January 9, 2017, only Sh25 billion from PTA Bank meant for infrastructure financing has been disbursed.

The report was tabled by Leader of majority Aden Duale in fulfilment of the law which compels Treasury to inform parliament of all loans agreements entered by the Government.