In June, Kenya’s debt from the World Bank crossed Ksh1.5 trillion ($9.99 billion) due to increased disbursements and the depreciation of the shilling, as reported by the Central Bank of Kenya. The outstanding loan to the World Bank reached Ksh1.57 trillion ($10.45 billion) at the end of the previous financial year, up from Ksh1.46 trillion ($9.72 billion) at the end of May. This significant growth in debt, amounting to Ksh110.9 billion ($738.35 million) within a single month, means that nearly 60 percent of Kenya’s total debt to multilateral lenders is owed to the World Bank.

The expansion of external debt is attributed to recent disbursements and the depreciation of the local currency, which has depreciated by 17 percent since January. The Treasury noted that the Ksh309.4 billion ($2.1 billion) increase in external loans is a result of disbursements made during the month and currency depreciation against major currencies.

Kenya’s external debt primarily involves the World Bank, Eurobonds, China, and the African Development Bank, accounting for a combined Ksh3.97 trillion ($26.4 billion). The country’s growing reliance on these financial partners for infrastructure projects and fiscal support has led to challenges in managing high debt service costs.

The Treasury estimates that the total debt service costs for the current financial year will reach a record Ksh1.62 trillion ($10.8 billion), with 38 percent of this amount going to external lenders. This Ksh1.6 trillion allocated for debt service represents 64 percent of the total ordinary revenue expected by the Treasury for the year ending June 2024.

Kenya’s total debt to external lenders amounted to Ksh5.4 trillion ($35.95 billion) in June and had increased to Ksh5.7 trillion ($37.95 billion) by the end of August, constituting 54 percent of the total public debt. This high exposure to foreign currency risk will be particularly felt when Kenya retires the 2024 Eurobond, which will deplete $2 billion from its reserves, equivalent to around Ksh300 billion.