Test Debt Guide

Country Debt Guide
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Kenya
Debt History
Relative to its African partners, Kenya did not
experience a deep debt crisis in the late 20th
century, and was therefore not part of the
Highly Indebted Poor Countries (HIPC)
initiative, and debt cancellation by Chia over the
period 2000-2018 was also small. The most
unstable period Kenya experienced was
between 1992 and 1993, when a serious
drought affected coffee yields and the wider
agricultural sector. The economy shrank two
consecutive years and the government ran a
double-digit fiscal surplus, whilst the public debt
to GDP ratio increased from 54% to 83%.
$13.66 million Chinese debt relief
Not Part of HIPC Initiative
KENYA IN 2021
6.1% economic growth
62% public debt to GDP ratio
-8.5% budget balance
7.5/ 8 DR’s Debt Transparency Index
In recent years, Kenya has had fairly stable growth averaging
5.7% over the past five years on the back of a strong service
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sector and improved consumption and investment. The
acceleration of public investment initiatives has also
contributed to greater public debt accumulation, which
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stands at 57% of GDP as of 2018. However, there has been
a steady deterioration in Kenya’s fiscal deficit since 2004,
which peaked in 2016 at 8.5%. More recently, government
cost cutting and attempts to raise taxes, including more
stringent criteria to qualify for tax exemptions, have reduced
the deficit slightly, to 7.4%, although this is still not
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considered sustainable by some creditors.
In 2019, the IMF assessed the Kenyan debt situation to be sustainable, with a moderate risk of debt distress
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(thereby outperforming most of the African countries surveyed in this report). The IMF did not see the rising
debt as a major source of concern because of its association with productive infrastructure investment aimed at
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promoting sustainable growth. As of 2019, despite the relatively high share of external debt, which accounts for
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53% of total debt stock, Kenya’s investment climate is generally favourable while its foreign reserves are
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adequate at $8.5 billion. However, the IMF is keen for Kenya to continue to cut government costs and raise more
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taxes, including by reviewing tax exemptions. Kenya’s tax revenue collection represented 15.1% of GDP in 2018,
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placing Kenya below the 2017 African average of 17.2%.
Kenya provides a thorough range of debt and fiscal debt statistics through its Ministry of Finance data portal and
the country scored the highest amongst analysed countries in the Debt Transparency Index. For illustration, the
types of projects Kenya has initiated with loans from China and the World Bank are shown below.