Kenya puts on hold debt repayment

Treasury CS Ukur Yatani (PHOTO: FILE)

NAIROBI, KENYA: Kenya has been granted a 6-month debt repayment relief by developed economies also known as the Paris Club following a successful application for the Debt Service Suspension Initiative (DSSI).

The new development will enable the country to devote resources freed to increase spending to mitigate the health, economic and social impact of the Covid-19 crisis

“The Paris Club has accepted Kenya’s application for debt service suspension, which now means that Sh32.9 billion of Kenya’s foreign debt owed to 10 bilateral partners under the Paris Club, falling due from 1st January 2021 to June 30, 2021”, he noted.

The country has already signed a Memorandum of Understanding (MoU) with the Paris Club, to be followed by individual MoUs which each country under the Club, covering the terms of payment post-30thJune, 2021.

“In effect, the initiative apart from suspending the payments will give us a total of five years to repay the loans, with a grace period of one year. This is not only timely, but a sign of confidence in the country and will give us the fiscal space to make the much-needed spending on the COVID-19 economic recovery strategy especially in the social, health and economic sectors”, said Yatani.

Kenya has also applied for debt service suspension under theG-20 DSSI framework, for amounts estimated at Sh40.6 billion due from January 1, 2021 to June 30, 2021, from non-Paris Club bilateral creditors. The formal approval is expected in the coming weeks.

The country will not seek debt service suspension from both its multilateral and commercial creditors, to safeguard its sovereign rating and its future access to international financial markets.