The Office of the Controller of Budget says Kenya’s stock of US-denominated debt has led to Shilling volatility even further and is piling pressure on the stock of public debt.
This comes against the backdrop of the dollar hegemony which has seen public debt rise to Ksh.680 billion in the past six months.
“The depreciation of Kenya shilling against the US dollar has led to an increase in the debt stock and debt repayments (principal and interest),” stated the Controller of Budget in submissions to Parliament’s Public Debt and Privatization Committee.
According to the Margaret Nyakango-led office, Kenya’s average debt is expected to increase by Ksh.40 billion every time the shilling drops.
By Tuesday, July 25, the shilling shed 0.07 percent in value against the dollar.
Since the advent of the coronavirus pandemic in March 2020 when the shilling exchanged at 101.9 units, it has shed 38 percent in value to 142.11 units against the dollar.
This means Kenyans will need to spend 38 percent more shillings to buy the same amount of dollars.
The rise in public debt means more pressure on taxpayers amid the controversial Finance Act, 2023 which remains suspended.