President William Ruto has called for an overhaul of the global debt system as he urged world leaders to treat public debt as a tool for development rather than a burden on third-world countries.
Ruto spoke on Monday, June 30, at the Fourth Financing for Development (FfD4) Summit in Seville, Spain, where he made a passionate appeal for more responsible lending practices and fairer financing mechanisms to suit the unique needs of African economies, including Kenya.
While welcoming what he termed as a growing consensus around the need for development-oriented debt infrastructure, Ruto was critical of a worrying trend where debt was used to tighten fiscal nooses around vulnerable nations.
“There is now consensus on the need for a development-oriented sovereign debt architecture, where public debt is an instrument for development, not a trap.”
Ruto argued that any sustainable development strategy should be tied to lower borrowing costs, debt transparency, and responsible lending.
Further, he flagged the unfair penalties imposed on African countries by global financial systems as he called for more accurate and long-term approaches to credit assessments.
As far as the IMF is concerned, President Ruto also pushed for significant reforms, particularly in governance, where he claims developing nations currently have very little say in decision-making.
He also referenced the 38-page Financing for Development conference outcome document for supporting changes such as lower lending rates, improved access to precautionary financial instruments, and better use of Special Drawing Rights (SDRs).
Ruto also endorsed the creation of the African Credit Rating Agency as a key step toward fairer assessments of the realities of African economies.
“Africa is not asking for favours. We want fairness, partnership, and investments,” Ruto said. “The world’s and Africa’s futures are inseparable. Together, let us walk this path with honesty, urgency, and resolve. Kenya certainly will.”
Ruto's appeal to the international community came a week after his government secured a Ksh16.484 billion ($126.8 million) loan from the International Fund for Agricultural Development (IFAD) for the Natural Resources Management Programme (INReMP), which aims to reinforce the country's environmental fitness.
The deal, which was signed by the Treasury Cabinet Secretary John Mbadi and IFAD Regional Director Sara Mbago-Bhunu on Monday, June 23, will have a 25-year repayment period, with a 1.41 per cent interest rate, a 1.39 per cent service charge, and a grace period of five years.
