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Why Kenya declined ksh 3 trillion debt relief that allowed the country to repay debt later

Kenya has turned down a debt relief that would have delayed debt payment as a way of cushioning the nation against coronavirus effects.

This was after a group comprising of 20 leading world economies (G20) came up with this program. According to the G20, this initiative would help in cushioning developing countries against the adverse effects of the novel coronavirus.

Waiving loan payment would free up over ksh 2 trillion that can then be channeled towards fighting coronavirus pandemic. However, Kenya rejected the proposal.

According to Ukur Yatani, Treasury cabinet secretary, this debt program would hurt the country. While on an interview with¬†Reuters, he argued that the relief would hurt Kenya’s credit rating.

CS Yatani further argued that postponing paying would limit Kenya’s access to international capital markets during the relief period. According to him, delaying the debt may be a potential problem for Kenya’s capability to fund the deficit in the future.

“We fear we might unnecessarily create a crisis,” the CS added.

We are having talks with lenders.

CS Yatani revealed that Kenya is in advanced talks with lenders, including China, Germany, Japan, Sweden, and France. This is in a bid to secure a restriction of payments that would last for a year. He further added that communication is progressing well.

“We have not concluded the negotiations, but they are proceeding on well.”

The CS further added that the G20 program does not benefit the country, given Kenya’s debt portfolio. He went ahead to note that every country adapts what is favorable to them.

“The G20 debt relief initiative does not offer optimal benefit given the structure of Kenya’s debt portfolio. Every country adapts to the situation based on its own circumstances,”¬†Yatani said.

He further revealed that Kenya currently has international debt totaling to ksh 3 trillion. A third of this debt is to private lenders.

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