In Summary
  • The agencies whose assets are at risk being include the financially troubled Kenya Airways (Sh76.39 billion), Kenya Ports Authority (Sh33.7 billion), Kenya Power (Sh14.01 billion) and Kenya Electricity Generating Company (Sh10.86 billion).
  • The others are Kenya Broadcasting Corporation (Sh6.95 billion), Kenya Railways (IDA concessionaire) (Sh4.59 billion), Tana and Athi Rivers Development Authority (Sh542 million) and East African Portland Cement (Sh674 million).
  • The agencies were used by the government as guarantors in the acquisition of the external debts dominated by China and World Bank’s International Development Assistance (IDA).
  • The Sh147.7 billion is an increase from the Sh133.79 billion in guarantees as at December 2017.

The assets of eight state bodies may be lost if the government defaults in repayment of Sh147.7 billion in external debts as of December 2018.

This is according to a Parliamentary Budget Office (PBO) document presented on Thursday to the Budget and Appropriations Committee of the National Assembly.

The agencies whose assets are at risk include the financially troubled Kenya Airways (Sh76.39 billion), Kenya Ports Authority (Sh33.7 billion), Kenya Power (Sh14.01 billion) and Kenya Electricity Generating Company (Sh10.86 billion).

The others are Kenya Broadcasting Corporation (Sh6.95 billion), Kenya Railways (IDA concessionaire, Sh4.59 billion), Tana and Athi Rivers Development Authority (Sh542 million) and East African Portland Cement Company (Sh674 million).

GUARANTORS

The agencies were used by the government as guarantors in the acquisition of external debts dominated by China and World Bank’s International Development Association (IDA).

The two make make up 64 per cent and 71 per cent of multilateral and bilateral debts respectively.

The Sh147.7 billion is an increase from the Sh133.79 billion in guarantees as at December 2017.

The debts guaranteed by KBC, Tarda and and the cement company remain non-performing even as the government continues to face increased debt refinancing pressure.

The PBO document explains that, “If an institution fails to make payments for a guaranteed loan, it [becomes necessary for] the government to step in and shoulder the extra burden by use of already limited resources."

In the event the government fails to clear the debts as required, the assets of the agency in question will be repossessed by the lending entity in line with the agreement entered. 

DEBT BURDEN

The National Treasury, in its annual public debt management report tabled in the National Assembly, projected that Kenya's public debt will hit Sh5.6 trillion by June and about Sh7 trillion by 2022 when President Uhuru Kenyatta completes his second and final five year-term.

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