Disseminating Kenyan's 2025 Medium Term Debt Management Strategy.
The CS Hon. John Mbadi was accompanied by the National Treasury PS, Dr. Chris Kiptoo, CBS and Mr. James Muraguri Chief Executive Officer of Institute of Public Finance, Dr. Margaret Nyakang'o - Controller of Budget and Technical officers from the Ministry and Relevant Stakeholders of during the dissemination of Kenya's 2025 Medium-Term Debt Management Strategy earlier today.
Today's meeting majorly focused on key highlights of the 2025 MTDS and exchanging insights and ideas as we disseminate our 2025 Medium-Term Debt Management Strategy (MTDS).
In his remarks, the CS highlighted that the gathering will provide all esteemed stakeholders the opportunity to further strengthen public debt management.The MTDS is an annual publication prepared pursuant to Section 33 of the Public Finance Management Act, 2012 that informs the Government decisions regarding public borrowing and public debt management as well as the desired structure of public debt portfolio in pursuit of cost minimization, risk management and sustainability over the medium-term.
This Strategy recognizes that a diversified public debt structure and deepening of the domestic debt market is necessary to mitigate against exchange rate risks on Kenya’s external public debt. The 2025 MTDS has been developed to guide public debt management over the period 2025-2028. It outlines the strategies and initiatives aimed at minimizing costs and management of risks of public debt over the medium term.
The MTDS analysis takes into account outstanding public debt and projected borrowing and debt service in the context of current and future macroeconomic environment and the conditions in the international and domestic capital markets.The external public debt comprises multilateral, bilateral and commercial creditors while domestic public debt comprises Treasury bonds and bills.
The redemption profile shows that 18.6 percent of domestic debt will mature by June 2025, mainly due to short-term (treasury bills) Government securities falling due. Overall, the repayment schedule is bunched for the next nine years due to large share of Treasury bills and near-term maturities treasury bonds, international sovereign bonds and syndicated loans.
The recent Debt Sustainability Analysis (DSA) indicates that Kenya’s public debt is sustainable but with a high risk of debt distress. The present value (PV) of public debt was 63.0 percent of GDP against the benchmark debt threshold of 55 percent.
It is key to note that the National Treasury has until 1st November 2029 to bring the PV of public debt within the threshold to comply with the law. Policy initiatives by the Government are necessary to diversify and/or expand export base and build gross international reserves to improve the external debt sustainability ratios.
The costs and risks outcome characteristics in the 2025 MTDS will be evaluated semi-annually and annually against sustainability threshold indicators to determine deviations and suggest mitigation measures. The evolving public debt structure and fiscal deficit will inform review of strategy for management of costs and risks of public debt going forward. In addition, any deviations will be used to inform strategy review and formulation of the MTDS in the next cycle.