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UPDATE 1-Kenya trims 2015 growth forecast, says debt levels sustainable
October 15, 2015 / 10:30 AM / 2 years ago

UPDATE 1-Kenya trims 2015 growth forecast, says debt levels sustainable

(Adds comments from finance minister)

By Duncan Miriri

NAIROBI, Oct 15 (Reuters) - Kenya has trimmed its 2015 growth forecast to 6 percent from 6.5 percent, the finance minister said on Thursday, citing deteriorating growth outlook for economies across the world.

“Sub-Saharan African growth has been scaled down. The global growth outlook has also been scaled down,” Finance Minister Henry Rotich told parliament.

Lawmakers had summoned Rotich to answer questions about the sharp rise in interest rates on government debt and delays in payments to civil servants, which one parliamentarian described as unacceptable and a “security risk” to the country.

Rotich said Kenya was not facing a liquidity crisis and the debt levels in East Africa’s biggest economy were “sustainable”. He said the government remained able to borrow money from domestic debt markets, but at higher rates.

Kenya’s central bank has this year raised interest rates by 300 basis points to stem the depreciation of the shilling, which has lost about 14 percent against the dollar this year.

The yield on Kenya’s short-term Treasury debt has spiked to above 20 percent in recent weeks, raising fears about the scale of government borrowing.

Rotich said the government wants to borrow more money from external markets as the borrowing rates on domestic debt market have been too high this year.

He also said the government expects to catch up on revenue shortfalls accrued so far this fiscal year and was planning to hire consultants to boost tax revenues. (Additional reporting by George Obulutsa; Writing by Drazen Jorgic; Editing by Janet Lawrence)

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