The World Bank has issued a warning to Kenya over its high debt levels, which are limiting the inclusiveness and sustainability of the nation’s economic growth.
The Washington-based lender has expressed concerns over the sharp rise in borrowing, driven partly by large increases in debt-financed public investments.
The borrowing trend is “eroding fiscal space and raising debt sustainability concerns,” according to the World Bank. The situation has left Kenya with a sizable and costly debt burden that limits its ability to pay for development priorities.
The report, which is published every five years, also highlighted “overly high debt-distress risks”. Kenya’s debt burden has been increased by projects such as a Chinese-funded and run railway.
This issue has become a focal point for investors as the country faces skyrocketing energy and food import bills, as well as low foreign exchange reserves.