Kenya has sought the Debt Service Suspension Initiative (DSSI) extension to June 2022, a one-year extension from the earlier granted June 30, 2021, debt service suspension secured in January.
Besides the relief under the DSSI, the country is also pursuing new limits access to IMF funds through the reallocation of existing special drawing rights and the allocation of new special drawing rights. Such will allow faster access of disbursements from the IMF Rapid Credit facility and the Rapid Finance Instrument, granted to countries facing urgent balance of payments needs.
These developments come only a few days before the IMF decides on Kenya’s $2.4 billion loan request to buffet the country’s response to the COVID-19, which have shrunk revenues. CBK governor Patrick Njoroge said the IMF Board would decide on the loan on April 2, with the first tranche of $314 million expected next week. In May 2020, the IMF issued Kenya a $739 interest-free loan to cushion the country against the pandemic’s shocks.
With a bulk of payments of debt payments due in the current year, Kenya is pursuing a $1.24 billion Eurobond by June 2020 as part f the treasury’s planned debt restructuring. Its return to the Eurobond market is against the terms of the Debt Service Suspension Initiative, which include a break from external commercial financing unless exempted.
Earlier, Fitch rating rated the country’s Long-Term Foreign-Currency Issuer Default Rating at B+ with a negative outlook, with positives like a favourable government debt structure, a strong growth track record and relative macroeconomic stability balanced against negatives of rising public debt, high net indebtedness and below “B” range medians GDP per Capita and governance indicators.