CoB Advises Ruto to Ditch Dollar Loans And Borrow in Other Currencies


The Controller of Budget has advised President William Ruto’s administration to explore borrowing loans in other currencies other than the dollar.

In the National Government Budget Implementation Review Report FY 2022/23 report, it was highlighted that the dominance of the dollar against the shilling had contributed to the increase of Kenya’s debt portfolio, which hit the Ksh10 trillion mark in June.

Currently, Kenya borrows loans in dollars with the repayments made in similar currency, hence exposing the country to various risks. Among them is the exchange risk attributed to fluctuations in the exchange rate between the shilling and the dollar. 

As of mid-October this year, the dollar crossed the 150-unit mark as the shilling continues to weaken. As the dollar increases, so does the debt, hence piling more pressure on Kenya. 

According to the Office of the Controller of Budget, Kenya’s debt portfolio grew from Ksh8.63 trillion on June 30, 2022, to Ksh10.25 trillion as of June 30, 2023.

“The exchange rate between the Kenya Shilling and the US Dollar was roughly 117.87 Kenya shillings in July 2022, while in June 2023, it averaged 141.14, a difference of 23.27 shillings (approximately 18.9 per cent exchange rate depreciation),” read the report in part.

“Depreciation of the Kenyan Shilling caused an increase in the debt stock and debt repayments (principal and interest) in Kenya Shilling terms. The continuous depreciation of the Kenya Shilling will necessitate an increase in the amount required for loan repayments.”

The report also cautioned that the government could be forced to make budget adjustments to address the growing debt.

Already, Ruto has directed the ministries to reduce their budget by 10 per cent owing to financial constraints. 

“The National Treasury should also explore opportunities of accessing funding in multiple currencies to guard against intense pressure on the local currency,” read the report in part.

“There is a need for fiscal consolidation with a target to reduce deficit budget financing and focus on tax administration measures to boost revenue collection.”

On the other hand, the Controller of Budget also recommended a special audit of the existing loans and committed loans, which will link the loans with the projects funded through borrowed funds.





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