The East African nation of Kenya has broadened its debt service relief request to all bilateral lenders, in a bid to save 69 billion Kenyan Shillings. This is according to the National Treasury.
The action is coming just days after a decision by the Paris Club of international decision to grant Kenya a 32.9 Billion Kenyan Shilling loan repayment break in order to help reduce the financial tension brought on by the ongoing Coronavirus pandemic.
According to the National Treasury, Nairobi has broadened its bid for reprieve from service its emerging debt payment obligations under the landmark debt relief initiative officially known as the Debt Service Suspension Initiative (DSSI). It was born from the G20 grouping of the world’s largest economies and supported by the International Monetary Fund (IMF) and the World Bank in April of 2020.
The G20 nations came to an agreement to freeze repayment of bilateral government loans for a total of 76 low income countries until the end of the year. The G20 also called on creditors in the private sector to participate on a voluntary basis.
The Principal Secretary of the National Treasury; Dr. Julius Muia during an interview stated that, “We have engaged all bilateral creditors. The projected DSSI relief is Sh69 billion.”
Julius Muia also made it known that Nairobi is in talks with Beijing which is currently its largest bilateral creditor under the framework.
The People’s Republic of China has so far provided funding worth billions of Kenyan Shillings. The funds have been channelled towards infrastructure including the Standard Guage Railway (SGR) between Nairobi and Mombasa.
The Principal Secretary of the National Treasury; Dr. Julius Muia said, “Kenya has applied for DSSI. China is one of Kenya’s bilateral creditors. In line with procedure, we are discussing our DSSI with all bilateral creditors.”
According to observers however, the debt relief initiative which is backed by the G20, has 2 major problems. One of which is that although China; Kenya’s largest bilateral creditor, is a member of the G20 and a signatory to the debt relief initiative deal, a sizable portion of the loans it granted to Kenya have been carried out ona commercial basis by quasi-public corporations, government agencies, as well as state owned banks like the Exim Bank of China and the China Development Bank.
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