Kenya's Foreign Debt Suspended as Economy Struggles

  • President Uhuru Kenyatta during a previous meeting
    President Uhuru Kenyatta during a previous meeting
    Twitter
  • Amid a struggling economy, Kenya received a debt service suspension from January to the end of June by the Paris Club of international creditors on Monday, January 11.

    The country filed for a Debt service suspension Initiative (DSSI) to the international creditor citing a number of reasons including the Covid-19 pandemic that has ravaged the economy.

    The 10 countries Kenya owes include Belgium, Canada, Denmark, France, Germany, Italy, Japan, the Republic of Korea, Spain and the United States of America.

    Central Bank of Kenya (CBK) building in Nairobi.
    Central Bank of Kenya (CBK) building in Nairobi.
    Simon Kiragu
    Kenyans.co.ke

    In a press statement, the Paris Club of international creditors announced that they had granted Kenya a six-month debt suspension.

    "Therefore, the representatives of the Paris Club creditors have accepted to provide to the Republic of Kenya a time-bound suspension of debt service due from 1st January to 30th June 2021.

    "The Government of the Republic of Kenya is committed to devote the resources freed by this initiative to increase spending in order to mitigate the health, economic and social impact of the Covid-19 crisis," read part of the statement.

    The international creditor added that Kenya is also committed to seeking from all its other bilateral official creditors a debt service treatment that is in line with the agreed term sheet and its addendum.

    A total of 12 countries agreed to the move to grant the country more time to service their Ksh69 Billion

    The countries include Australia, Austria, Brazil, Finland, Ireland, Israel, the Netherlands, Norway, the Russian Federation, Sweden, Switzerland and the United Kingdom.

    This comes after the country reversed its decision and joined the G20 coronavirus debt relief initiative after declining to join earlier in 2020.

    Finance Cabinet Secretary Ukur Yatani noted that the country received clarity on what impact the debt relief programme might have on the country’s credit rating.

    In July 2020, China which is Kenya's largest creditor declined a request by Kenya to have the debt restructured.

    The Asian country cited Kenya's decision to participate in G20’s Debt Service Suspension Initiative (DSSI) where it is also a member. 

    A file image of Treasury CS Ukur Yatani
    A file image of Treasury CS Ukur Yatani
    Citizen Digital