Kenya has to raise its debt ceiling, finance ministry says

NAIROBI: Kenya has to raise its debt ceiling of 9.0 trillion shillings ($82.30 billion) to accommodate fiscal deficits for upcoming financial years, the finance ministry said.

Total debt stood at 7.3 trillion shillings at the end of last year, equivalent to 65.6% of GDP.

"To accommodate the fiscal deficits in the financial year 2021/22 (July-June) and into the medium term, the statutory debt limit has to be expanded," the ministry said in a document to parliament seen by Reuters on Friday.

It did not specify by how much the limit could go up.

The ceiling was last raised from 6 trillion shillings in 2019, reflecting growing borrowing due to gaping budget deficits and investments in infrastructure projects like roads.

Kenya has received debt service suspension under a Group of 20 initiative aimed at helping poor nations cope with the impact of COVID-19, and it is in talks with the International Monetary Fund (IMF) for new lending.

The East African nation is considering using private placements, diaspora bonds, Islamic bonds (sukuks) and green sovereign bonds to raise funds externally in the medium term, the ministry said.

The economy is expected to grow by 7.0% this year as it recovers from the coronavirus crisis, the document added, raising the forecast from an initial 6.4%.