Kenya paid Sh1.44 billion in commitment fees for foreign loans that have yet to be drawn, according to Auditor General Nancy Gathungu. Her 2023 report on the National Government reveals that these fees were for loans approved but not yet utilized.
The fees relate to loans signed between April 24, 2017, and December 15, 2022, totaling Sh25.24 billion. As of June 30, 2023, none of these funds had been accessed for the associated projects.
Gathungu noted that better mechanisms to absorb the committed credit on time could have reduced these fees. The report also highlighted that the government paid Sh617.7 billion in loan costs, including Sh154.7 billion in foreign loan interest.
Debt records from June last year showed Sh170.2 billion in guaranteed loans to state agencies, which the government must cover if these agencies default. This situation exacerbates the country’s current struggle with debt repayments.
The report also noted a shortfall in planned foreign debt repayments, with only Sh1.20 trillion of the Sh1.39 trillion target repaid, a 13% shortfall (Sh184.5 billion). This gap in repayment could impact service delivery and implementation of planned activities.
Kenya faces increased debt repayments, notably $433 million (Sh56.1 billion) to China for the Standard Gauge Railway, and $31.5 million (Sh4.1 billion) in semi-annual interest for a $1 billion Eurobond. Other repayments include $22.3 million (Sh2.9 billion) to the Eastern and Southern African Trade and Development Bank, $18.6 million (Sh2.4 billion) to France, and $12.9 million (Sh1.7 billion) to the World Bank.
Gathungu emphasized the need for the National Treasury to ensure that projects are ready for execution before incurring new loans.
