Kenya Seeks More Debt Suspension After $600 Million Relief

NAIROBI (Capital Markets in Africa) — Kenya received debt repayment suspensions for a total of $600 million from China and the Debt Service Suspension Initiative and has requested the Group of 20 to consider a similar freeze for amounts expected after June, according to the central bank.

The amount suspended was due in the first half of 2020 and will be repaid over five years, Governor Patrick Njoroge told reporters in the Kenyan capital, Nairobi. About $378 million, or two-thirds of the total, is owed to China, he said.

In April, the G-20 will consider Kenya’s request to extend the deal during the International Monetary Fund spring meetings, he said. The G-20 common framework aims to gather Chinese and private lenders into a global debt-restructuring push for developing nations facing challenges keeping up with payments amid the coronavirus pandemic.

Kenya’s government won’t seek debt suspension from multilateral and commercial creditors “to safeguard its sovereign rating and its future access to international financial markets,” Treasury Secretary Ukur Yatani said earlier this month.

East Africa’s biggest economy is facing fiscal challenges after the Covid-19 shock eroded much of its buffers and the government will rely on the debt freeze to help strengthen its financial position, Njoroge said.

“We have entered 2021 with minimal buffers,” he said. “We need to be much more efficient with the buffers we still have.”

Source: Bloomberg Business News