According to Brookings, countries are now shifting away from official multilateral creditors who come with stringent conditions to non-concessional, (commercial) debt with relatively higher interest rates and lower maturities.

But this trend is raising concerns around debt sustainability given the possibility of higher refinancing risks and foreign exchange risks.

The IMF, in its regional economic outlook report for sub-Saharan Africa released last week, says that surging public debt-to-GDP ratios for Burundi, Kenya, Rwanda, Tanzania and Uganda has left them highly exposed to greater rollover and exchange rate risks.

“With several countries facing increased foreign exchange and refinancing risks, it is critical to enhance debt management frameworks and transparency,” says IMF.

In May, Kenya went for a third Eurobond raising Ksh210 billion ($2.1 billion) to pay off other maturing debt obligations, finance development programmes and fund government operations.

In September, the country’s lawmakers also voted to increase the government’s borrowing ceiling to Ksh9 trillion ($90 billion) in the current 2019/2020 fiscal year, breaching the EAC debt ceiling on debt accumulation, which is set at 50 per cent of the GDP.

According to the IMF, EAC countries will close 2019 with very high debt-to-GDP ratios.

Burundi’s ratio will reach a high of 63.5 per cent from 58.4 per cent last year. It will be followed by Kenya and Rwanda whose debt-to-GDP ratios are expected to increase to 61.6 per cent and 49.1 per cent from 60.1 per cent and 40.7 per cent respectively during the same period.

The debt-to-GDP ratios for Uganda and Tanzania will increase to 43.6 per cent and 37.7 per cent from 41.4 per cent and 37.3 per cent respectively.