Commercial banks have overtaken the World Bank Group’s International Development Association as Kenya’s biggest external creditor, underlining the continued reliance on expensive commercial loans to bridge the budget deficit.Fresh data released by the Central Bank of Kenya shows the government owed foreign commercial banks Sh594.1 billion by the end of March, a 65 per cent jump from Sh360.2 billion a year earlier.This is Sh89.4 billion more than IDA’s Sh504.7 billion, which represents an increase of 6.5 per cent year-on-year from Sh473.8 billion.“Kenya continues to record a build-up of commercial and semi-concessional borrowing since her elevation to a low middle-income economy status in September 2014,” the CBK said in the quarterly Economic Review report for the third quarter of 2016/17 that closed on June 30.Kenya rebased her economy in 2014 that increased the GDP by 25 per cent, moving the country from low-income status to lower middle-income.This has disqualified the country from concessional loans it enjoyed from the IDA — the World Bank’s arm which gives concessional loans and grants to poor countries.IDA, however, remains the biggest source of multilateral debt which stood at Sh806.9 billion in March 2017, compared to Sh766.6 billion the year before. Total external debt stood at Sh2.1 trillion at the end of March, a 25.8 per cent rise from Sh1.67 trillion a year earlier.

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