Kenya stands in line to realize gains of up to Ksh.243.6
billion ($2.3 billion) from the suspension of all 2020 loan repayments to its
external creditors, the World Bank Group says.
The multilateral lender
is set to appeal for an official moratorium on debt repayment for the year by
all countries in Sub-Saharan Africa (SSA) alongside the International Monetary
Fund (IMF) later this week through proposals to the International Development
Association (IDA).
President Uhuru Kenyatta |
According to the World
Bank Group, the relief on debt would serve to soften the economic blow on
countries from the resulting Covid-19 pandemic by freeing up essential funding
to members.
“The multilateral
institutions argue preserving the sustainability of public debt among poorer
countries may require a moratorium on official bilateral debt payments and
participation by commercial creditors,” noted the World Bank in its updated
regional outlook published last week.
Further, the suspension
on repayments is seen enlarging the fiscal space of African countries, freeing
up an estimated Ksh.3.8 trillion ($35.8 billion) in new liquidity to the region
or an equivalent 2.1 of the (SSA) Gross Domestic Product (GDP).
The suspension of
payments to Kenya’s official bilateral creditors alone is estimated at Ksh.71.4
billion ($675 million) or an equivalent 0.8 per cent of GDP.
The
World Bank has continued to express its worry for rising debt distresses in the
region as it expects the Covid-19 crisis to grow countries fiscal deficits by
an average 3.5 per cent in a worst case scenario. – The CitizenTV
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