Kenya evaluating G20 debt suspension offer before application, Yatani says

The National Treasury Cabinet Secretary Ukur Yatani has termed reports in local dailies claiming the country is broke as “unfortunate and malicious” even as the debt cloud continues to linger over the country’s coffers.

CS Yatani while responding to a publication by one of the local newspapers, which suggested that Kenya is seeking an application for the G20 Debt Suspension Initiative to the tune of Kshs. 75 billion, said the decision on the move has not yet been reached.

“Some countries have faced challenges rearranging debt service with creditors with undesirable outcomes. In this respect, Kenya seeks a cautious approach in evaluating the costs and benefits of the offer and make informed decision to safeguard the economic and financial standing of the country,” said Yatani in a statement released Thursday.

In May, the group which is made up of 20 major world powers offered a debt relief to liquidity-stricken countries until the end of the year in order to cope with challenges triggered by coronavirus pandemic.

“Kenya welcomes this intervention among others in form of financial support targeted to health sector,” CS Yatani added.

The group has since extended the relief by six months to June 2021.

As at the close of the Fiscal Year 2019/2020, Kenya’s public debt stock amounted to Kshs. 6.7 trillion which was equivalent to 65.7% of GDP, while interest payment amounted to Kshs. 441.4 billion.

Total public debt is projected to hit Kshs. 7.5 trillion by end of the current fiscal year.

The reluctance by Kenya to tap the relief which would have temporarily frozen payments has been faulted by various quarters given that the country expects to borrow up to Kshs. 1 trillion in the FY 2020/21 to fund budget gaps on the account of COVID-19.

“Whereas challenges remain given the uncertainties of COVID-19 pandemic, we are confident that the economy will respond to policy and structural reform measures supported by our development partners,” said the CS.

According to the Parliamentary Budget Office, since FY 2015/16, Kenya has incurred a total of Kshs. 7.6 billion as commitment fees due to non-disbursement to external creditors.

The office further indicated that 34.9% of the total public debt will mature within a year.

Even as Kenya gives debt relief a wide berth, the Treasury says it is actively holding discussions with the International Monetary Fund to stabilize the economy and address fiscal challenges.