President William Ruto, on Thursday, June 22, proposed a new law allowing Kenya to restructure its debt and ease pressure on austerity measures amid hard economic times.
During a roundtable discussion in Paris, France, Ruto stated that restructuring debt will allow Kenya and other African governments to honour their credit obligations.
Creditors were asked to adopt a new law allowing countries 50 years to clear their maturing debt with a grace period between 10 to 20 years.
According to the President, the new debt repayment policy will allow his administration to save close to Ksh1.4 trillion (USD 10 billion) annually.
Part of the saved amount will be diverted to boost other sectors of the economy and reduce overdependence on loans to fund development projects.
"Let us agree that the money we are supposed to pay for the next 10 years as debt repayment be converted into a new law that is a 50-year loan with a 20-year grace period so that you don't have a problem with rating.
"Kenya, for example, pays Ksh1.4 trillion (USD 10 billion) to service its debt. If I had Ksh1.4 trillion (USD 10 billion) for development every year instead of paying debt, it would make a huge difference," Ruto stated.
He also advocated for the establishment of a new multilateral climate action financing mechanism sourced from global carbon taxes on fossil fuel and aviation.
Ruto also asked the World Bank and the International Monetary Fund to lessen their monetary policies and allow African countries to enjoy resources.
“Africa does not want anything for free. But we need a new financial model where power is not in the hands of the few," Ruto stated.
According to the National Treasury, Kenya's debt stood at Ksh9.6 trillion as of March 30, 2023.
Out of the Ksh9.6 trillion, credit owed to external creditors totalled Ksh5 trillion, with local lenders accounting for the balance.
While appearing before the Public Debt and Privatisation Committee, Treasury Principal Secretary, Chris Kiptoo disclosed that the government had allocated Ksh607.1 billion to repay debt in President William Ruto's first budget.
Kenya was projected to spend Ksh3.6 trillion in the 2023/24 financial year.
