NAIROBI, Feb 28 (Reuters) - Kenya plans to change the
government's debt ceiling to a proportion of its gross domestic
product (GDP) to make debt management more sustainable,
President William Ruto's office said on Tuesday.
The East African nation's public debt jumped during an
infrastructure construction drive under Ruto's predecessor Uhuru
Kenyatta, prompting warnings from ratings agencies.
At present, the East African economy has a debt ceiling set
in absolute terms, at 10 trillion Kenyan shillings ($78.83
billion). The new proposal, approved at a cabinet meeting, would
set the ceiling at 55% of GDP, Ruto's office said.
"Cabinet approved the transmittal to parliament of the
legislative proposals replacing the nominal debt ceiling of 10
trillion shillings with a debt anchor set at 55% of GDP in
present value terms," the office said in a statement.
Ruto's government, which took over in September, has pledged
to curb expensive commercial borrowing in favour of cheaper
sources like the World Bank to reduce debt servicing pressures.
Public debt stood at 60% of GDP at the end of 2022,
according to the ministry of finance, which cited a debt
sustainability analysis prepared by the International Monetary
Fund (IMF) and World Bank.
The ministry expects the debt level to fall to below 55% of
GDP by 2026.
The International Monetary Fund and the World Bank classify
Kenya as at a high risk of debt distress, but the finance
ministry says its debt load is sustainable.
($1 = 126.8500 Kenyan shillings)
(Reporting by George Obulutsa; Editing by Anait Miridzhanian
and William Maclean)
george.obulutsa.thomsonreuters.com@reuters.net))
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.