KENYA IN LINE TO SAVE KSH.244 BILLION FROM DEBT RESTRUCTURE – WB

By Kepha Muiruiri, Nairobi KENYA

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.

President Uhuru Kenyatta

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).

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