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As a result, the economies resorted Hopkins University shows that Ethiopia The International Monetary Fund
to massive borrowing, both from the owes Beijing $13.73 billion, followed by considers a debt to GDP ratio of 50
domestic and international markets to Kenya at $9.8 billion. Uganda owes $2.96 per cent to be the optimal limit for
quench their loan appetite, with fears billion and Tanzania $2.34 billion. developing economies such as the EAC
that the increasing uptake of commercial members.
loans could push most of them into debt Rwanda, South Sudan and Burundi
distress. owe China the least amounts — $289 “With several countries facing increased
million, $182 million and $99 million foreign exchange and refinancing risks,
The IMF, in its regional economic respectively. it is critical to enhance debt management
outlook report for sub-Saharan Africa frameworks and transparency,” warned
released at end of 2019, say, surging Ethiopia’s biggest intake of the Beijing the IMF in its latest Regional Economic
public debt-to-GDP ratios for Burundi, loans was in 2013, borrowed more than Outlook report for 2020.
Kenya, Rwanda, Tanzania and Uganda $6.62 billion from Beijing for its mega
has left them highly exposed to greater projects, including the setting up of Kenya’s debt-to-GDP ratio hit 61.6 per
rollover and exchange rate risks. manufacturing zones, while its neighbor, cent at the end of last year, from 60.1
Kenya borrowed $3.7 billion in 2014, per cent at end of 2018, while Burundi’s
“With several countries facing increased accounting for the highest debt intake ratio climb to a high of 63.5 per cent
foreign exchange and refinancing risks, from Beijing. from 58.4 per in 2018.
it is critical to enhance debt management
frameworks and transparency,” says IMF. According to the IMF, further fiscal IMF further warns that “The amount the
consolidation is needed over the medium EA countries are paying to redeem the
Last year, Kenya went for a third term among regional economies to debts will result in capital flight, moving
Eurobond raising Ksh210 billion ($2.1 reduce debt vulnerabilities and create forward, at the expense of social services
billion) to pay off other maturing fiscal space for development needs. delivery”
debt obligations, finance development
programmes and fund government Kenya and Uganda’s total debts as at Kenya and Tanzania’s total public debts
operations. June, 2019, stood at $58.1 billion and as at June 2019 stood at $58.1 billion and
$12 billion respectively, while Tanzania’s $22.5 billion respectively, while Uganda’s
The country’s parliament voted to public debt stood at $36.78 billion in the stock of public loans was $12 billion.
increase the government’s borrowing same period according to the Bank of
ceiling to Ksh9 trillion ($90 billion) Tanzania. Rwanda’s public debt tally was $5.4
in the current 2019/2020 fiscal year, billion by 2018, having risen from $4.8
accordingly breaching the EAC debt Experts observe that, rapid build-up of billion the previous year, according to a
ceiling on debt accumulation, which is loans has pushed East African countries World Bank report released in October.
set at 50 per cent of the GDP. close to a debt crisis, putting at risk the
region’s long-term economic stability. This adds up to $100.34 billion debt
The EAC Monetary Union protocol, for the five EAC countries, when
which was signed by the regional heads Five East African Community member consolidated with Burundi’s national
of states in 2013, sets a 50 per cent debt- countries have together amassed more debt is currently estimated at $2.34
to-GDP ratio as the convergence criteria than $100 billion domestic and foreign billion according to global business data
for the attainment of a single currency debt, stretching their repayment budgets provider Statistica.
regime by 2024. a deadline that is already to the limit, of which Kenya and Burundi
in jeopardy. and currently a subject of have the highest loan distress profiles With the debt numbers, experts warn
review by the member states. relative to their EAC peers, with their that the region is facing a debt overhang
debt to gross domestic product (GDP) as its appetite expensive loans increase.
Government debt as a per cent of GDP ratios exceeding 60 per cent this year.
is an important economic parameter
used by investors to gauge the country’s
ability to make future payments on its
financial obligation thereby affecting
the country’s borrowing costs and
government bond yields, according to
economists at Trading Economics.
The East African countries of Kenya,
Uganda and Tanzania are highly
indebted to China, and are among the
top 50 countries in the world on the
Asian giant’s debt beneficiary list.

The latest data from the China-Africa
Research Initiative (Cari) at John EAC Head of States: Salva Kiir, Uhuru Kenyatta, Yoweri
Museveni and John Magufuli

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