The Treasury overshot its budgetary allocation for interest payments by S8.2 billion last year signalling tough times for the country as the shilling weakens.
Data from Treasury shows it spent Sh416.2 billion to settle public debt against a target of S78 billion.
A gazette notice signed by the Finance secretary Henry Rotich also disclosed the country borrowed more than double what it had budgeted from the reopening of the sovereign bond last December.
The Treasury raised Sh73.8 billion from the sovereign bond sale against the planned S6.4 billion.
As at the time of going to press the Treasury had not responded to our email queries despite promising to do so.
Kenya’s debt levels have been rising with the International Monetary Fund, World Bank and Central Bank of Kenya urging the government to tame its appetite for new debt. Fitch, a global ratings agency, has recently downgraded Kenya as a result.
READ: Fitch puts Kenya on negative outlook as public debt mounts
Central Bank officials earlier this week disclosed they were helping the Treasury improve its cash management practices that have seen it unnecessarily raise the debt burden.
“Most of the time you will find them having balances in ministries and they are paying interest on the overdraft.
“So we are trying to work on a project that can minimise the interest they pay by consolidating the amounts,” said CBK officials at a meeting with senators.
Rebasing of the economy last year gave the Treasury headroom to absorb new debt and it has not shied away from borrowing, especially from the foreign markets.
The Treasury shows the government remained within budget target for domestic borrowing though, taking up Sh292.6 billion from locals against S39.8 billion it had projected.
READ: Treasury says Sh2.5trn public debt manageable
Borrowing from domestic market crowds out private investors and increases interest rates charged on business and household loans.
Last year, Parliament nearly doubled Treasury’s borrowing limit from external markets to Sh2.5 trillion from Sh1.3 trillion arguing the move would allow for funding of infrastructure projects without hurting growth. In 2013, Parliament had raised the ceiling to Sh1.2 trillion from Sh800 billion.
The country has borrowed billions of shillings to finance power generation and road construction including issuing its debut sovereign bond last year of Sh170 billion ($2 billion). It is estimated that these borrowings could soon take the debt load past 60 per cent of gross domestic product.
Depreciation of the shilling is expected to push the interest payments for the foreign denominated loans further up, especially in the second half of the year. The shilling has depreciated 11.5 per cent against the dollar from the beginning of the year to trade at over Sh100 to the dollar.