Due to significant short-term debt obligations and predicted income collection that is expected to increase by 34% in 2023–2024 from the current level of Sh930.35 billion to Sh1.25 trillion, Kenya is pressing for debt forgiveness.
On the eve of the Spring Meetings, members of the Parliamentary Public Debt and Privatization Committee and their counterparts from Finance and Planning met with representatives from the World Bank and the International Monetary Fund (IMF) to start discussions about debt forgiveness.
Kuria Kimani, the chairman of the parliamentary finance and national planning committee, acknowledged the need for immediate assistance as the nation is in debt difficulty while speaking to a local television station.
“It is not a secret that we are in debt distress. We appreciate some of the fiscal discipline measures initiated by the IMF and World Bank. However, those are long term. We need urgent intervention to prevent a default,’’ Kuria said.
He claimed that the state is having trouble even paying its employees, stressing the urgency of taking quick action to end the problem.
The overall public debt of the nation is currently Sh9.2 trillion. The debt servicing is expected to grow by 34% in 2023–2024 from the present Sh930.35 billion to Sh1.25 trillion. The 10-year sovereign bond's issuance in 2014 signaled the Jubilee administration's shift to using commercial debt to finance the budget, and Kenya is expected to make the lump sum payment to retire it.
At interest rates of 6.78% and 5.87%, respectively, the nation borrowed $2.75 billion (Sh346 billion at yesterday's exchange rate) in two tranches that included a 10-year paper and a five-year issuance ($750 million).The revenues of another $2.1 billion Eurobond issued in May 2019 were used in part to repay the five-year paper.
However, according to a report by Reuters, the chances of a debt restructure for the East African country is slim. The reports suggest that despite the present difficulties and an approaching bond payment, Kenya is not anticipated to request a restructuring of its debt, the head of the International Monetary Fund's Africa Department said on Friday.
“Abebe Aemro Selassie was speaking to reporters at the IMF and World Bank spring meetings here. Kenya has a $2 billion Eurobond maturing in June 2024 . The country's central bank governor told Reuters earlier this week that the government was quite relaxed about,”,the report read in part.
A country's eligibility for debt relief is formally decided by the Executive Boards of the IMF and World Bank, and the international community agrees to reduce debt to a level that is seen as sustainable.
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