Sessional Paper No.14 of 2014 on Increase of Government of Kenya External Borrowing Ceiling

Abstract

This sessional paper focuses on the government’s decision to increase external borrowing ceiling. As at 30th September 2014 the GoK's total disbursed outstanding nominal external debt stock stood at Ksh 1,045 billion against the set statutory ceiling of Ksh 1,200 billion. This leaves headroom of Ksh 155 billion. The ceiling was set when dollar/shilling exchange rate was 1 US dollar to Ksh 86 but now it is 1 US dollar to Ksh 89. The National Treasury on behalf of the government seeks to tap (increase) the recently issued sovereign bond for an amount not exceeding US$ 750 to finance on-going development projects, further the disbursements of the SGR loans are expected to accelerate having satisfied the conditions precedent to disbursements and thereby paving the way for implementation of the project. This taken together with funding (upcoming disbursements) of other projects loans to finance the development budget will drive the quantum of external debt beyond the current ceiling of Ksh 1.2 trillion. The Kenya Government is, in the context of the national vision 2030, committed to transforming Kenya to a middle income country by 2030. To realize this objective means among other things1 the country must accelerate economic growth to around 10% annually and sustain it at that level for a long period. To achieve and sustain such high growth rates requires massive investments in infrastructural development. For this to happen1 we need external assistance in areas of energy, roads and water among others…