The government spent more than half a trillion shillings to service debts in the first two months of this year, even as it remains with a larger burden of repaying more than Sh700 billion in the four months to June.

Latest data from the National Treasury shows that in January and February, government spending on public debt was Sh560 billion.

The Treasury, in the update on government revenues and exchequer issues for eight months starting July 2023 to end of February 2024, notes that total issues towards public debt service hit Sh1.157 trillion by end of February.

This was a sharp jump from the Sh597 billion that the Controller of Budget (COB) reported as expenditure on public debt service, between July and end of December 2023.

Part of the heavy spending on public debt service is the Sh210 billion ($1.44 billion) the government used for partial early redemption of the $2 billion (Sh266.5 billion, at current exchange rates) Eurobond that was due in June, as the Treasury sought to rebuild investors’ confidence that Kenya would not default on the debt.

The Treasury in February went to the Eurobond market and borrowed $1.5 billion that will be due in 2031, which was used to settle part of the 2014 Eurobond.

“The proceeds from the 2031 Eurobonds will fund the offer to buy Kenya’s existing $2 billion Eurobonds due in 2024, pending demand in the tender offer,” Treasury Cabinet Secretary Njuguna Ndung’u said in February.

The CS said the 2031 Eurobonds would “smoothen the maturity profile” of the Eurobonds maturing in June this year.

“The remaining portion of the 2024 Eurobonds not purchased in the tender offer will be funded through a mix of government funds and financing from multilateral and bilateral sources, including bank syndication,” Prof Ndung’u said.