The Kenyan government is looking to convert short-term loans into long-term to subdue pressure arising from loan maturities.
At least Ksh.87.8 billion worth of long-term debt will be converted into short term.
This as the country closes in to debt ceiling, currently set at Ksh.10 trillion.
“Right now, we don’t have headroom for accumulating debt, so in a sense, we have to go down into liability management. When you are buffeted by multiple shocks, the reaction is often to use the resources that you have or even borrow to overcome the crisis,” said Prof. Njuguna Ndung’u, Treasury Cabinet Secretary.
Comes barely a month after President William Ruto directed the Treasury not to look for markets which will offer facilities at more than 10 percent interest rate.
“We will go to the market and if cannot find money at 10 percent, we will go back and look for other sources,“ said Ruto adding that “it’s not possible for us to borrow at beyond 10 percent.”
Kenya, in the past administration, has been going for markets with facilities of up to 12 to 14 percent interest rate.
The President is pushing to narrow public debt, currently at Ksh.8.5 trillion accrued over the past ten years.
The move will require serious austerity measures, including freezing on spending among state officers and corporations.