Based on a projection on exports and economic growth, Kenya’s debt risk profile could improve soon
Kenya is set to be removed from nations with a high loan default rate by the World Bank Group in 2028, according to Business Daily Africa. However, this will only happen if the countries’ lawmakers adhere to a strategy that will see government expenditure and the growing taxes curtailed.
Implementation of policy reforms and fiscal consolidation programs will also play a huge role in this.
In the fiscal year 2022/23, projections on the country’s public debt burden show a peak followed by a decline. By 2028, the present value of public value is projected to fall below 55%. This report follows the $750 million Development Policy Operations released in the past week.
A projection by Ukur Yatani, the group’s Treasury Secretary, shows that the fiscal consolidation program will play a huge role in narrowing fiscal deficits in the budget. As per the projection, the fiscal deficit gap will be narrowed from 8.7% GDP in the current to 7.5% in the new fiscal year. A further 3.6% has been projected in the fiscal year 2024/25.
The latest Debt Sustainability Analysis by the International Monetary Fund and the World Bank upheld the country’s placement among nations with a high risk of debt distress. The report was carried out in April.
The country’s debt profile moved from moderate to high at the onset of the COVID-19 pandemic. This came after the measures set to contain the pandemic such as low tax collections, decrease in exports, and the delay in the implementation of the fiscal consolidation program.
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