Kenya loses Sh87 billion by shunning a debt relief offer from G20 countrie

By Dominic Omondi | October 10th 2020 at 01:00:00 GMT +0300

Treasury Cabinet Secretary Ukur Yatani. [ File, Standard]

Kenya has lost Sh86.6 billion after refusing to take an offer to have its debt service suspended by the group of 20 richest countries, according to a new World Bank report.

This is nearly enough to pay for the ongoing road construction in the next 12 months as tax revenues dwindle following the adverse effects of Covid-19 pandemic.

However, the National Treasury has been non-committal on taking up the offer fearing that the move will jeopardise its credit rating, which would then make it difficult for the country to access credit in the open market.

The World Bank noted that the Debt Service Suspension Initiative (DSSI) to grant debt service suspension to the poorest countries, to help them manage the impact of the pandemic, has provided some respite for some countries.

“However, so far, participation in the DSSI has led to small potential savings for African countries (US$5.2 billion, Sh561.6 billion, for participating countries), while fears of downgrading by rating agencies in the event of private creditor participation are engendering co-ordination problems,” said the World Bank in the Africa Pulse Report.

“Given the nature of the Covid-19 shock, greater