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{
    "id": 1393787,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1393787/?format=api",
    "text_counter": 217,
    "type": "speech",
    "speaker_name": "Sen. Faki",
    "speaker_title": "",
    "speaker": {
        "id": 13211,
        "legal_name": "Mohamed Faki Mwinyihaji",
        "slug": "mohamed-faki-mwinyihaji-2"
    },
    "content": "(3) The debt service to exports (liquidity indicator) surpasses its 15 per cent threshold due to repayment of Eurobonds in 2024 and 2028, as well as the rollover of external bank loans in 2025 and 2026. (4) The breaches in the debt thresholds in terms of exports indicate increased vulnerability of public debt to export and financing shocks. It is clear from the cost and risks analysis of the current public debt portfolio that- (1) Depreciation of Kenya shilling against major currencies increased the nominal debt to Gross Domestic Product (GDP) ratio to 70.8 per cent in June 2023 from 67 per cent in December, 2022. (2) The total interest payments as a share of GDP increased to 5.5 per cent as at June, 2023 from 5.3 per cent as at end of December, 2022. (3) The weighted average interest rate of external debt increased to 4.5 per cent in June 2023 compared to 3.9 per cent in December 2022. (4) Average Time to Maturity of the total portfolio declined from 8.8 years in December 2022 to 8.5 years in June 2023. (5) The projected debt redemption profile is characterized by large maturities in 2028, 2029, and 2030 on account of Eurobond and bank syndicated debts. Madam Temporary Speaker, noteworthy, findings made by the Committee include- (1) The stock of public and publicly guaranteed debt is Kshs11.248 trillion; comprising of domestic debt of Kshs5.058 trillion (45 per cent) and external debt of Kshs6.89 trillion (55 per cent). This is an increase of Kshs970 billion from Kshs10.278 trillion by the end of FY 2022/23 and is attributed to exchange rate movements and additional borrowing, among other factors. (2) The present value (PV) of debt to GDP stands at 67.2 per cent against the recommended benchmark of 55 per cent as provided in section 50 of the Public Finance Management (PFM) Act, 2012. Whereas this is a breach against the benchmark, the National Treasury projects that the present value of debt will be aligned with the benchmark by Financial Year 2028/29 through a defined fiscal consolidation path. This, however, requires regular reporting to Parliament to enhance continuous oversight and ensure compliance. (3) Although the debt-carrying capacity declined from strong in 2021 to medium as at December 2023 and the National Treasury indicates that the overall debt levels remain sustainable. The risk of debt distress is high due to global shocks that can potentially exacerbate macroeconomic vulnerabilities and subdue economic performance. (4) The recent liquidity management measures undertaken in February 2024 involving partial buy-back (USD 1.5 billion) of the USD 2 billion Euro bond maturing in June 2024, addressed the settlement risk associated with the Bond and has consequently influenced key macro variables such exchange rate dynamics and investor sentiments. (5) The proposed fiscal deficit for FY 2024/2025 of Kshs703.9 billion is to be financed through net foreign financing (55 per cent) and net domestic financing (45 per cent). Despite the National Treasury indication that the National Government will favour concessional borrowing, there is a proposed commercial borrowing in FY 2024/25 of The electronic version of the Senate Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Director, Hansard and AudioServices, Senate."
}