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Kenya to spend $4.6 billion of revenue on paying debt

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Staff writer |
Kenya street market
Africa   Kenya must pay $31.6 billion

Kenya proposes to spend $4.66 billion on public debt repayments in the financial year starting June.

It is effectively locking 20 percent of budget expenditure into debt repayment and putting the country's hopes of a lower inflation and interest rate regime in doubt.

At the start of the current financial year, Kenya's debt was the highest in the region at $31.6 billion, with more than 60 percent of it being domestic, while Tanzania's national debt stock peaked at $19.14 billion, with 80 percent of this in external debt.

Uganda's public debt stood at $7.6 billion, with 60 percent of it being external, while Rwanda's was at $1.85 billion, of which 76 percent was foreign debt.

Kenya's debt expense estimate is contained in the budget summary for the 2016/17 financial year submitted to parliament by the National Treasury Cabinet Secretary Henry Rotich.

In the estimates, Kenya is proposing that out of its $2.15 billion going to principal repayment, $1.72 billion or 79 percent will be spent on domestic debt with the remainder settling foreign debt.

Of the $2.51 billion marked for interest, $1.97 billion will go towards settling the domestic debt and the rest for foreign debt.

Kenya spent close to 40.9 percent of its tax revenues to settle its debts in the first nine months of the 2015/16 financial year. Data from the Treasury shows that the country spent $3.17 billion in the year to March, to service its debts against tax collections of $7.75 billion over a similar period.

As at the start of the 2015/16 financial year, Kenya's debt stood at $31.6 billion, which is 67 percent above the $18.9 billion three years ago.

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