Moody’s faults Kenya’s debt management

Kenya is among the six countries that have contributed to the overall decline in Sub-Saharan Africa’s (SSA) debt management since 2016, a new report by rating agency Moody’s says.

The SSA is the only region where the 2018 policy rating — measuring the degree of appropriateness of debt management strategy — has deteriorated as measured under the World Bank’s Country Policy and Institutional Assessment (CPIA).

“Improvements in debt management have not been commensurate with increased risks implied by the changes in debt structures. Ethiopia, Kenya, Nigeria, Republic of the Congo, Mozambique and Zambia contributed to this decline,” said Moody’s in their report.

The implication is that Moody’s is unconvinced the government will be able to follow through its medium-term debt management strategy 2019 that has outlined a shift from expensive commercial loans to concessional borrowing on the external front.

In recent years, the Treasury has depended on commercial debt inform of Eurobonds and syndicated loans to fill the external financing requirements following the reclassification of the economy as lower middle income after rebasing in 2014.

The government debt strategy sees gross external debt financing 38 percent and 62 percent gross domestic financing as the best option. On the external debt, concessional is proposed at 26 per ent, semi-concessional eight percent and commercial four percent.