Sunday 16, September 2018 by Bloomberg

Kenya to keep debt below IMF threshold

 

The International Monetary Fund has recommended the government not exceed a threshold of 74 per cent of net present value.

Kenya’s debt is sustainable at 49 per cent of net present value and the East African nation’s Treasury intends to keep it below 50 per cent, Principal Secretary Kamau Thugge said.

The International Monetary Fund has recommended the government not exceed a threshold of 74 per cent of net present value, Thugge said Thursday in the capital, Nairobi. “So, we are very far away from that threshold that would show our debt is getting unsustainable.”

There’s been growing concern that Kenya is living beyond its means with debt as a ratio of gross domestic product expected to reach 60 per cent in the fiscal year through June 2019.

The Treasury revised its funding shortfall for the current fiscal year to 5.9 per cent of GDP from the 5.7 per cent budget target in June and anticipates an economic growth rate of six per cent in 2018, Thugge said.

The expiry on Thursday of a $1.5 billion precautionary IMF facility to protect Kenya from exogenous shocks “should not have any impact on the macroeconomic aggregates,” Thugge said.

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