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Kenya’s ‘KSh500 billion government borrowing’ furore – what the data showed

This article is more than 1 year old

In January 2023, Kenya's most widely read newspaper corrected a story attributing an eye-catching borrowing spree to the country's new government. 

The front-page story in the 28 January weekend edition of the Daily Nation had claimed that the government of president William Ruto, in office since September 2022, had "borrowed KSh500 billion in three months".  

Citing central bank data, the story gave the actual amount as KSh506.9 billion borrowed between September and November, or US$4 billion.

The new debt, the paper said, was “an average of KSh5.6 billion per day in three months since assuming office, building on the legacy of the former Jubilee government’s high appetite for loans”.  

It added: “The amount is almost double the average quarterly borrowing by former President Uhuru Kenyatta’s government”.

Ruto's Kenya Kwanza coalition succeeded the Jubilee Party government. In office since 2013, it was led by president Uhuru Kenyatta, with Ruto as his deputy.

Claim widely republished

As its front page went viral online, the Nation changed its story to show that the amount borrowed was in fact lower than it had originally reported, at KSh137 billion. 

A correction on its website reads:  “An earlier version of this story incorrectly stated that President William Ruto’s administration had borrowed KSh500 billion in its first three months in power. The correct figure is Sh137 billion borrowed between September and November last year, as per the latest Central Bank of Kenya report. We apologise for the error.”

The country’s media regulator also weighed in on the incorrect reporting in early February.

But several news sites had already republished the Nation’s original claim.

“Ruto surpasses Uhuru: Kenya Kwanza gov't borrows over KSh500b in 3 months,” the popular online news site said, rounding up the daily average to KSh6 billion.

Another site with wide reach, Opera News, also published an article with the same claim, using the Nation article as its source.

Crunching the numbers

When the furore had died down, what did the data show?

Kenya’s public finance management act allows the government to borrow to fund the budget and pay loans. 

The Central Bank of Kenya publishes monthly data on key economic indicators. These include inflation, interest rates, money supply, public debt and bank reserves. 

The Nation quoted the central bank’s “latest” report. A review of the report shows the publication picked figures under “deficit financing”. This is defined as “external borrowing, domestic borrowing and sales of government shares in government agencies (privatisation)”. 

The data shows that deficit financing rose from KSh82.27 billion in August to KSh219.75 billion at the end of November, an increase of KSh137.48 billion. 

Over the same period, public debt rose from KSh8.7 trillion to KSh8.9 trillion, a difference of KSh236 billion.

In addition to borrowing, the national treasury has previously attributed the increase in public debt to “exchange rate fluctuations”.

In a debt bulletin in October 2022, which is the most recent, the treasury said 69.3% of Kenya’s external debt was denominated in dollars. This was followed by the euro (18.8%), the Chinese yuan (5.3%), the Japanese yen (4.1%) and the Sterling pound (2.3%).

Between September to November, the Kenyan shilling depreciated significantly against the major foreign currencies, in particular against the US dollar and the euro. 

Using central bank data on grants sourced from the treasury, and monthly data on actual borrowing for August and November 2022, we calculated the increase in actual borrowing to be KSh245.5 billion. (See our calculations here). This is less than half of what was claimed.

There's no evidence of government borrowing of KSh500 billion in the three months between September and November 2022.

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