Kenya's unpaid bills rise to $3.3 billion, adding to the pain businesses are enduring from the pandemic

  • East African nation struggling to ease its debt burden

  • Government seeks to halve its budget deficit by 2024-25

The Kenyan national government’s arrears on payments to contractors and suppliers increased 8% in the year through June, adding to the pain businesses are enduring from the Covid-19 pandemic.

The pending bills, including unfulfilled statutory payments to agencies such as pension funds, amounted to 359.5 billion shillings ($3.3 billion) as at the end of June, the National Treasury said in a report on its website. The outstanding claims continue to climb even after President Uhuru Kenyatta issued a directive more than a year ago to quickly settle them, pointing to the challenges his administration faces as it struggles to lessen its debt burden. Delayed payments, in some instances for years, have hit businesses in East Africa’s largest economy and led some to collapse.

The government targets to narrow its budget deficit to 7.5% of gross domestic product in the 2021-22 fiscal year, and more than halve it three years later from 7.8% in the period that ended June 30.

Other report highlights:

  • The nation’s total cumulative debt-service payments to external creditors amounted to 234.6 billion shillings in the 12 months through June. It comprised of 128.3 billion shillings in principal payments and 106.3 billion shillings in interest.
  • China accounted for the lion’s share in Kenya’s foreign debt servicing after Eurobond payments, taking 31.2 billion shillings, or 13% of the total paid in the fiscal year; the Word Bank’s International Development Association took 28.8 billion shillings.
  • An import levy, whose proceeds are partly spent on financing the operations of a Chinese-built railway, grew 23% to 28.5 billion shillings, surpassing a target of 27.2 billion shillings.