Kenya moves to curb fast expansion of external debt as shilling falls

Nairobi, Kenya | Xinhua | Kenya has moved to diversify the currency composition of its external debt to curb its faster expansion as the local currency, the shilling, fast loses ground against major international currencies, according to the National Treasury.

The shilling has declined nearly 8 percent against the dollar year-to-date, standing at 120.9 Wednesday as well as against the Japanese yen and Chinese yuan.

The local currency, however, has appreciated against the pound sterling and the euro.

The country’s public debt load stood at 8.6 trillion shillings (71.11 billion U.S. dollars) in August, an 11.5 percent rise from a year earlier, the Treasury said in a debt report seen Wednesday.

In August, the shilling traded against the dollar at 119.8, an indication that at the current level, Kenya’s debt has expanded.

“The government is currently exercising currency diversification with an aim of mitigating against the exchange rate risk on external debt,” said Treasury.

The government department said the proportion of external debt denominated in dollars stood at 68.1 percent at the end of July, euro at 18.3 percent, yen at 5.7 percent, yuan at 5.4 percent and pound sterling at 2.3 percent. Initially, the external debt, which makes up 52 percent of total debt, was primarily held in dollars.