The East African nation of Kenya, is looking to secure a Debt Service Suspension Initiative (DSSI) extension to up to June 2022. This will be longer than the 1 year extension which was granted to up to the 30th of June 2021.
Apart from the Debt Service Suspension Initiative (DSSI) that is being targeted, Kenya is also looking to attain new limits with regards to access to International Monetary Fund (IMF) funds via a new apportionment of the already existing special drawing rights as well as the apportionment of new special drawing rights. This will make it possible to gain much faster access to disbursements from the International Monetary Fund (IMF) Rapid Credit facility and the Rapid Finance Instrument, which is given to countries that are facing needs pertaining to the urgent balance of payments.
The Treasury Cabinet Secretary; Ukur Yattani, “We propose… enhancement of the Debt Service Suspension Initiative (DSSI) through [the] extension of the consolidation period for a further one year to June. This action will yield additional external resources, addressing debt vulnerabilities and providing liquidity.”
The news is coming just before a short period of time during which the International Monetary Fund (IMF) will make a decision on the East African nation of Kenya’s 2.4 billion United States Dollars loan request to help it better combat the ongoing Coronavirus pandemic which has had a devastating effect on revenues. The governor of the Central Bank of Kenya (CBK); Patrick Njoroge made it known that the International Monetary Fund (IMF)’s Board will make a decision on the 2nd of April 2021. Once that happens, the first installment of 314 million United States Dollars will be paid next week. The International Monetary Fund (IMF) has in May of 2020, issued an interest free loan of 739 million United States Dollars to Kenya to help it properly combat the ongoing Coronavirus pandemic and its effects.
With the majority of Kenya’s payments of its debts being due in 2021, the East African nation of Kenya is looking to secure a 1.24 billion Eurobond by June 2020. This is seen as part of the nation’s Treasury’s planned restructuring of the nation’s debt.
Its return to the Eurobond market is however against the terms of the Debt Service Suspension Initiative (DSSI) which also includes a break from external commercial financing unless when an exemption is made.
Fitch rating had earlier on rated Kenya’s Long-Term Foreign-Currency Issuer Default Rating at a B+. It however added a negative outlook with an addition of positives like a strong growth track record and relative macroeconomic stability balanced against negatives of rising public debt, and a favourable government debt structure. It also added high net indebtedness as well as below “B” range medians GDP per Capita and governance indicators.
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