Trend in the share of Kenya’s Total Public Debt Stock to GDP
Trend in the share of Kenya’s Total Public Debt Stock to GDP
| Post date: Thu, Apr 18, 2019 | | Category: Debt | |
Introduction
The ability of a country to fulfill its debt obligations can be measured using a variety of ratios. Among the ratios used to measure this phenomenon is the public debt to GDP ratio. The rise in total public debt as a percentage of GDP is alarming as more resources are channeled towards servicing debts overtime rather than financing government development initiatives which would improve the welfare of the society.
Trend in the share of Kenya’s Total Public Debt Stock to GDP (1999 – 2018)
Source: Central Bank of Kenya, World Bank and National treasury
As illustrated in the chart above, the period between 1999 and 2000 witnessed an increase in the proportion of public debt as a share of GDP, however there was a slight decline in the proportion of public debt as a share of GDP between 2000 and 2002 and a substantial decline between 2003 and 2007. The decline in the proportion of public debt as a share of GDP between 2003 and 2007 was attributed to the fact that GDP was growing at a faster rate than government borrowing. However, public debt as a proportion of GDP began to rise between 2011 and 2017 and this was mainly attributed to the fact that government borrowing to finance various infrastructure projects such as the Standard Gauge Railway, was growing at a faster rate than GDP. It’s important to highlight that over the years analyzed, 2003 was the year that had the highest proportion of public debt to GDP amounting to 65%.
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