Why IMF excluded Kenya from interest payment waivers

IMF Managing Director Kristalina Georgieva speaks at an event. AFP PHOTO 

By BRIAN NGUGI
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Summary

• Rwanda and the Democratic Republic of Congo among 19 African countries to benefit from the debt interest waiver.
• The IMF boss said the Bretton woods institution is mulling more waivers based on capacity and support from developed nations which are its key funders.
• Kenya is among Africa's heavy borrowers accumulating a huge portfolio especially due to lending from China to fund infrastructure projects.

The International Monetary Fund (IMF) excluded Kenya from the list of countries granted loan interest payments waivers because it’s per capita income was above $1,215 (Sh128,790).

Kenya, which is classified as a lower-middle-income country, recently joined mounting calls to rich nations like China and Group of 20 (G20) to hold off debt interest payment this year for poor and developing nations amid worsening economic fallout from the Covid-19 pandemic.

But the IMF was granting a reprieve to countries whose per capita income was below $1,215 (Sh128,790), which is lower than Kenya’s $1,710 (Sh181,260).

Kenya’s borrowing to the IMF is also small relative to the debt it owes other multilateral lenders like the World Bank.

IMF loan to Kenya stood at $481 million (Sh50.9 billion) in June 2019, representing 5.27 percent of Sh947.5 billion the country owes multilateral lenders.

Rwanda and the Democratic Republic of Congo (DRC) are among the first debt relief beneficiaries of the IMF after the multilateral lender approved this year’s loan interest payments waivers for 25 countries.

“Today, I am pleased to say that our executive board approved immediate debt service relief to 25 of the IMF’s member countries under the IMF’s revamped Catastrophe Containment and Relief Trust as part of the fund’s response to help address the impact of the Covid-19 pandemic,” said managing director Kristalina Georgieva in a statement.

“This provides grants to our poorest and most vulnerable members to cover their IMF debt obligations for an initial phase over the next six months and will help them channel more of their scarce financial resources towards vital emergency medical and other relief efforts.”

Other African countries that will receive debt service relief under the deal include Benin, Burkina Faso, Central African Republic, Chad, Comoros, The Gambia, Guinea and Togo.