Treasury Cabinet Secretary Ukur Yatani. FILE PHOTO | NATION MEDIA GROUP The impact of the Covid-19 pandemic is likely to be felt in July when the country will need Sh630 billion to settle debts that will fall due.
Kenya’s total debt reached a new high of Sh6.3 trillion on March 20.
This position has been made worse by the depreciation of the shilling, which has reached an average of Sh106.7 to the dollar, one of the lowest this month.
The debt position will get worse in coming months as the shilling weakens further, given that most of Kenya’s debt portfolio is dollar denominated.
The amount of debt falling due this year has dropped by Sh29 billion after reconciliations passed through the supplementary budget by the National Treasury.
The drop has revised what Kenya planned to pay this year to Sh253.2 billion, down from the Sh282.3 billion that was contained in the original budget for 2019/20.
The revision comes at a time Kenya has started talks with foreign lenders with a view of getting repayment holidays at a time the world is headed into a recession due to the Covid-19 pandemic.
President Kenyatta revealed last week that Kenya had opened talks with external lenders to suspend debt during the Covid-19 crisis.
“We’re in discussion with the largest economies in the world on the issue of suspension of debt for a period in order to allow us to spend more combating this pandemic,” the President said
Other regional and global institutions, such as the African Development Bank and the Africa Import Export Bank, have created emergency credit facilities that Kenya plans to tap into, he said.
“We will use these facilities to support producers and exporters so that they can return to full production and protect jobs and livelihoods,” Mr Kenyatta said.A third of all the debt billions that fall due this year belong to China, through the Exim Bank of China and China Development Bank, making the Asian nation one of the key countries Kenya must engage in tackling the debt headache.Data from the National Treasury shows that the two banks expect a total of Sh78.4 billion this year.Out of this, Sh23 billion will go to the principal repayments owed to the Exim Bank of China. An additional Sh37.8 billion will be interest owed to it.This amount would have been Sh10.5 billion more had China not delayed by six months disbursement of […]