Creditors Have Granted Kenya A Time-Bound Debt Suspension

As Kenyan domestic and foreign debt continues to balloon, currently at 10.3 trillion shillings, creditors have agreed to give her a time-bound debt suspension.

Germany, Denmark, Canada, France, Italy, Japan, Spain, Republic of Korea, and the United States of America, under the Paris Club say the time-bound debt suspension for Kenya will run from January to June 2021.

Kenya’s debt has been rising fast sending chills down the spines of policymakers who feel the country would soon be unable to pay the debts.

The Senate was forced to place the debt ceiling at 9 trillion shillings with the aim of controlling Kenya’s roaring appetite for borrowing. But GoK seems determined to borrow no matter what.

“The representatives of Paris Club creditors have accepted to provide to the Republic of Kenya a time-bound debt suspension due from January 1 to June 30, 2021,” said the creditors in a statement.

During the period of the debt suspension, Kenya will be required to put her house in order in order to improve “transparency in handling debts.”

At the same time, Kenya bowed to pressure from the International Monetary Fund (IMF) to include both parastatal and county loans to the overall national debt.

The inclusion now takes Kenya’s national debt to 10.3 trillion shillings, above the ceiling set by the Senate at 9 trillion shillings.

Currently, analysts say Kenya cannot survive without borrowing. The situation is so dire that she is borrowing to pay other loans. That is, digging one hole to fill another.

The problem with Kenya is that she borrows without a plan. Most of the cash that is borrowed is stolen through massive corruption within and without the government.

It is estimated that Kenya loses about 1 trillion shillings, a whole third of the national budget to corruption. So, is the debt suspension going to help, or is just burying the head in the sand hoping the problem will melt away?

READ: Kenya’s Public Debt Rose To Ksh 7 Trillion In Two Months