Kenya is set to save up to $802.6 Million which translates to Ksh85.3 Billion in a plan by the World Bank to temporarily suspend debt payments by the world’s poorest nations.
In a statement on the global lender's website on June 19, it was noted that the Debt-service suspension initiative (DSSI) was urgently needed to allow low-income countries to concentrate their resources on fighting the pandemic.
"In April 2020, the World Bank’s Development Committee and the G20 Finance Ministers endorsed the Debt Service Suspension Initiative in response to a call by the World Bank and the IMF to grant debt-service suspension to the poorest countries to help them manage the severe impact of the COVID-19 pandemic," the institution noted.
According to estimates in a new database from the Bank, Kenya is set to be the third biggest beneficiary of the scheme with Angola leading the list with an expected saving of $3.4 billion (Ksh358.5 billion), Pakistan is second with $2.4 Billion (Ksh257.6 Billion).
Kenya was classified as being under high risk of external and overall debt distress.
The institution noted that the estimates were as of June 15, 2020, and they would be updated once a week.
The G20 called on private creditors to participate in the initiative on comparable terms with the main goal of the DSSI to allow poor countries to concentrate their resources on fighting the pandemic and safeguarding the lives and livelihoods of millions of the most vulnerable people.
In the initiative, the IMF and the World Bank are monitoring spending, enhancing public debt transparency, and ensuring prudent borrowing.
"Borrowers, therefore, commit to using freed-up resources to increase social, health, or economic spending in response to the crisis.
"Beneficiaries also commit to disclose all public sector financial commitments (involving debt and debt-like instruments). Sound data on public sector financial commitments will improve assessments of debt sustainability and financing needs," the notice illustrated.
Under the DSSI, countries also commit to limit their non-concessional borrowing as supported by ceilings under IMF programs and the World Bank’s non-concessional borrowing policies.
In the debt-relief program, the world's poorest countries could save over $12 Billion owed to sovereign and other creditors this year.
In May 2020, The World Bank Board of Directors approved a Ksh100 billion budget for Kenya to help close the fiscal financing gap, while supporting reforms that help advance the government’s inclusive growth agenda, including in affordable housing and support to farmers’ incomes.
