…as Mining takes a steep knock due to strikes and load-shedding

NAIROBI - Kenya’s average loan grace period has dropped from 10 years to an average of four years, exposing the country to a vicious debt cycle.

This was revealed at the seventh annual Africa Fiscal Forum bringing together exchequer representatives from the continent and international financial partners led by IMF.

Vitor Gaspar, director fiscal affairs at IMF, said Kenya must consider long term debt instruments to effectively space repayments.

“Although short term debts attract lower interest rates, they mature fast, forcing economies to either borrow elsewhere to repay or negotiate for postponements. Countries in Africa should consider reviewing debt management plans,” Gaspar said.

Addressing the Parliamentary Committee, IMF representative to Kenya Jan Mikkelsen asked Kenya to consider long term domestic borrowing as opposed to

JOHANNESBURG - A strained mining sector, pulled down by the worst gold production performance in six years, will weigh on GDP growth in 2018.

Mining production decreased by a higher-than-expected 4.8% year on year in December, after a 5.6% contraction in November, data from Statistics SA showed on Thursday.

Economists polled by expensive external debt instruments denominated in foreign currencies.

“The risk with such a huge dollar-denominated debt is that a slight weakening of the local currency is sufficient to increase size of the debt, making it difficult for the country to meet its obligations,” Mikkelsen said.

Kenya’s total debt has been growing at a faster rate in the past six years, moving from Sh1.63 trillion in June 2012 to macro-economics website Trading Economics expected a contraction of 0.6%.

The sector was hard hit by the continued strike at Sibanye-Stillwater and intermittent electricity from Eskom towards the end of 2018.

For 2018 as a whole, mining production was 1.6% lower compared with 2017.

Seasonally adjusted mining production decreased by 1% in the fourth quarter compared current Sh5.1 trillion, this cording to CBK data.

The international lender asked Kenya and her peers in Sub-Sahara Africa to improve revenue collection mechanisms and effectively limit borrowing. The region has some of lowest tax to GDP ratios in the world. Governments must intensify their revenue collection mechanisms to avoid submerging into debt cycles.

The two day conference coming at the time Kenya ac is is with the previous quarter.

Most subsectors reported lower production in December compared to a year earlier. The largest negative contributors were gold, down 31%; iron ore, down 14.3%; “other” metallic minerals, down 18.4%; copper, down 30.8%; and chromium ore, down 9.3%.

Stats SA reported that its mining production index, which was set to 100 points in 2015, was 92.1 in December, raising against time to meet nearing debt obligations.

The first external debt to mature this year will be the $800 million syndicated loan that Kenya obtained from four international commercial lenders including Standard Chartered, Standard Bank, Citi and Rand Merchant Bank in March 2017.

The facility which had a two year maturity will expire next month, attracting up to eight per cent interest per year. The down from 101.4 in November. For 2018, it was 98.5.

The total sales of SA’s mining industry in December came to R49.98bn, an increase from R42.59bn in December 2017 and from R46.61 in November 2018. Stats SA shows coal is SA’s biggest revenue earner, with sales of R14.72bn in November followed by platinum group metals with total sales of R11.34bn, and gold at R6.24bn. - BUSINESS LIVE

country will also start repaying $2.8 billion (Sh280 billion) debut Eurobond that it issued issued in June 2014 to retire a $600 million (Sh61.2 billion) syndicated loan taken in 2012.

A total of $2 billion (Sh202 billion) was borrowed from international investors in June 2014 comprising a five-year issue of $500 million (Sh50.50 billion) at an interest of 5.875 per cent and $1.5 billion (Sh151.50 billion) for 6.875 per cent to be repaid in 10 years.

The first trench of this loan is set to mature in July.

- THE STAR OF KENYA