Kenya will not seek suspension of its debt through the G20 initiative citing restrictive terms. According to Treasury CS Ukur Yattani, the G20 program aimed at suspending bilateral payment obligations poses a risk to Kenya’s ability to finance its deficit later in the year.
Instead, Kenya is engaging creditors like Germany, Sweden, Japan, China, and France for a moratorium on installments for at least a year. While the country has not concluded deals with the creditors, Yattani is optimistic that the negotiations will go well.
The G20 program aims to help developing countries access funding for health services during the COVID-19 pandemic. The program potentially frees up over $20 billion which countries can channel to health services.
Ukur Yattani is specifically concerned that the program does not suite Kenya’s circumstances. The terms of the deal will limit Kenya’s access to international capital markets during the period, creating an unnecessary crisis.
“The G20 debt relief initiative does not offer optimal benefit given the structure of Kenya’s debt portfolio,” Reuters quotes Yattani. “Every country adapts to the situation based on its circumstances.”
Related Articles: Kenya Seeks Suspension of Debt Payments.
The Debt Initiative Threatens Credit Rating
The CS also told Reuters that he is concerned about the implication of the relief to Kenya’s credit rating.
“Kenya is taking a cautious approach of seeking debt relief from bilateral creditors to safeguard its sovereign credit rating,” Yattani said.
Recently, Moody’s revised Kenya’s rating to negative given its rapidly deteriorating financial health. This emanates from huge debt levels and deteriorating tax revenues caused by the closure of businesses and job losses from the pandemic.
While the economic situation is bleak, not all hope is lost. The Cabinet assured investors that the country has adequate reserves to manage payments for the next year.
