National Treasury Cabinet Secretary Ukur Yatani launches the Economic
Survey 2020 at Treasury Building, in Nairobi, on April 28, 2020. PHOTO |
EVANS HABIL | NATION MEDIA GROUP
Kenya is seeking Sh275 billion in loans from the World Bank, the
European Union (EU) and the International Monetary Fund (IMF) to plug
the gap in revenue created by the Covid-19 stimulus package.
The
Treasury has asked for Sh100 billion from the World Bank, Sh75 billion
from the IMF and Sh100 billion from the EU Investments Bank.
The government, which was expecting a Sh20 billion grant from the EU, has also announced plans to negotiate the repayment of loans to China.
A third of the country’s debt due this year is owed to China, with Kenya expected to hand the Asian giant some Sh78.4 billion.
Kenya’s
debt has risen to Sh6.2 trillion, or 58 per cent of its wealth. Last
year, the National Assembly raised the debt ceiling to Sh9 trillion.
The
Treasury also wants to spread out or stagger the contracting of
external loans over the 2019/20 and 2020/21 financial years so as to
cushion the economy from the coronavirus effects.
It is also looking at lowering the fiscal deficit from the
2016/17 high of 8.9 per cent to 3.5 by 2022/23, reducing commercial
borrowing by gradually shifting to concessional loans, moving from
Treasury bills to Treasury bonds and cancelling or reallocating external
loans to priority projects.
“We are engaging donors,
the IMF and World Bank for emergency support. We still have space to
borrow from the domestic market and development partners to bridge the
shortfalls in revenue,” Treasury Cabinet Secretary Ukur Yatani told a
Senate ad hoc committee on Wednesday.
GROWTH OUTLOOK
Besides
the Exim Bank of China, Kenya has also borrowed Sh43.3 billion from the
Trade Development Bank, IDA (Sh27.3 billion), France (Sh17.5 billion),
Italy (Sh8.9 billion), Japan (Sh5.7 billion), ADB/ADF (Sh8.1 billion),
Germany (Sh2.9 billion) and Spain (Sh2.2 billion).
The request to the IMF was made Wednesday, with a response expected in 10 days.
The World Bank had already given Kenya Sh6 billion to help it fight the coronavirus.
Like
many countries, fears were rife that Kenya might not pay her loans.
“Kenya continues to meet its debt obligations. We have never defaulted,”
Mr Yatani said.
The minister added that the
government released Sh1.3 billion via M-Pesa to vulnerable Kenyans in
slums to mitigate the effects of the pandemic. “The programme will cost
Sh10 billion,” he said.
This is separate from the Sh8.5 billion the government has earmarked for ordinary cash transfers.
Equally, some Sh620 million has been released to drill boreholes in Nairobi, with 90 already sank.
The Treasury has downgraded Kenya’s economic growth outlook to between 1.8 and 2.5 per cent from the anticipated six per cent.
OUTSTANDING BILLS
Of the Sh13.25 billion in pending bills marked
as payable, the Treasury has paid Sh13.11 billion, with Prisons Service
and the National Youth Service (NYS) bills being fast-tracked.
Verifying the bills, the CS said, would involve presenting evidence that goods or services were ordered and received.
Should there be evidence of forgery or malpractice, arrests and prosecutions would follow.
“This
should be the last exercise that puts to rest the pending bills at
Kenya Prisons Service and NYS,” Mr Yatani told senators.
He added that 21 of the 47 counties have settled their pending bills following a directive from President Uhuru Kenyatta.
These
are Baringo, Elgeyo-Marakwet, Embu, Homa Bay, Kajiado, Kericho, Kilifi,
Kwale, Kitui, Lamu, Laikipia, Makueni, Wajir, Kakamega, Nyamira,
Taita-Taveta, Uasin Gishu, Nyandarua, Nandi, Nyeri and Busia.
The
minister added that Trans Nzoia, Machakos, Bungoma, Murang’a and Kisii
counties have paid more than 95 per cent of their bills.
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