Kenyans have a heavy burden to shoulder in repaying an external debt that amounts to Sh3.7 trillion. The truth is that the National Treasury will have a rough time servicing this debt under the prevailing circumstances.
Disruptions caused by the Covid-19 pandemic have had a negative effect on our economic performance. International lockdowns following attempts to stop spread of coronavirus put a lid on our exports and had a dampening effect on the tourism sector that led to an exponential drop in our foreign exchange earnings. In addition to that, job losses and company closures meant the economy would suffer serious setbacks for a long time.
As a consequence, Kenya is unable to service its external debt. The only way out of this conundrum is to request lenders to reschedule loan repayments. So far, countries under the Paris Club have given Kenya some debt relief, but China, our biggest lender, has not. Cumulatively, Kenya owes China about Sh736 billion.
Countries under the Paris Club have given Kenya relief in the repayment of Sh32.9 billion that would have been made between January and June 2021. The Paris Club has pushed back the repayment of this particular loan by five years. The repayment of other debts scheduled to start in July 2021 will, however, continue as earlier agreed.
China has so far given debt relief to two African countries; Angola and Zambia. Such consideration should be extended to Kenya to help in its economic recovery and rebuilding sectors like health post Covid-19. Treasury must double its efforts to convince China of this need. Yet even as this is being done, it is absolutely necessary to re-evaluate our thirst for external debt.