DEBT STRESS
…Kenya debt pressure rises as IMF loans hit Sh110bn
NAIROBI- Kenya’s budgetary sup port loans from the International Monetary Fund (IMF) have hit Sh110 billion this year af ter the lender disbursed an additional Sh29 billion on Friday to help the country recover from the economic fallout from the Covid-19 crisis.
The IMF board said the loan will assist Kenya to re duce exposure to debt default risks even as it implemented cost-cutting reforms.
“Kenya showed remarkable resilience to the Covid shock in 2020 and is staging an economic recovery. Growth is now estimated to accelerate to 5.9 percent in 2021” IMF said.
The IMF in April approved a 38-month loan arrangement of Sh264.18 billion for Kenya under the Extended Credit
Facility and the Extended Fund Facility to help respond to the economic shocks of the pandemic.
The type of credit Kenya has sought from the IMF is a quick-disbursing facility where money flows straight into the budget to top up the public purse and is used at the discretion of the government.
Kenya had sought the loan from IMF in December, making it the second facili ty extended to Kenya by the
Bretton woods organisation since the outbreak of Covid-19 last year, following the $739 million (Sh83.43) billion re ceived in May 2020.
The latest IMF loan dis bursement adds to Kenya’s stock of public debt, which stood at Sh7.91 trillion as of the end of August 2021 - an equivalent of 63.9 percent of the country’s GDP. The debt stock as of August comprised 32.7 percent and 48.8 per cent external and domestic respectively.
Data by the National Treasury shows that overall, the national government ex ternal debt stock increased by Sh34.23 billion in August from Sh4.02 trillion in July 2021. Debt owed to bilateral creditors rose by Sh11.44 bil lion from Sh1.05 trillion, while multilateral debt increased by Sh18.70 billion from Sh1.67 trillion. Antoinette Sayeh, IMF deputy managing di rector and acting chair, said Kenya has shown progress in reforms aimed at shaking off the economic effects of the pandemic. Kenya’s return to the IMF in recent years comes as the country’s debt-carrying capacity continues to reduce with each round of borrowing, with the lender listing Kenya among countries with a high risk of debt distress. – DAILY NATION, Kenya.