The Paris Club of International creditors may help Kenya by offering debt relief that will help ease the country’s financial distress experienced as a result of Covid-19.
Kenya has so far received a loan repayment break amounting to Sh 32.9 billion that would have paid for the first 6 months of the year. and would eventually make more savings if the break will be extended till the end of the year.
Dr. Patrick Njoroge, the Central Bank of Kenya (CBK) governor announced the extension of the debt service waivers during a post monetary policy committee (MPC) briefing that was held on 28th January 2021.
In particular, he expressed G20’s commitment to have the Debt Service Suspension Initiative (DSSI) beyond June 2021 which will be considered in the IMF- World Bank spring meeting that will be held in April.
Earlier this month the Paris Club— which includes Belgium, Canada, Denmark, France Germany, Italy, Japan, Republic of Korea, Spain and the US; announced that it had accepted Kenya’s request to have its debt service suspended from January to the end of June 2021.
Kenya will repay its debt over a period of five years with a grace period amounting to 12 months. This is a relief to the nation considering the decline in the revenue collected due to the Covid-19 pandemic.
Kenya has also requested for relief from non- Paris club creditors estimated at sh 40.6 billion which is due from January 1 to June 30.
In a nutshell, For the six months to June 2021, Kenya’s bilateral debt to wealthy countries stood at sh 66 billion with China having the lion’s share amounting to sh 41 billion.
According to the Finance Cabinet Secretary Ukur Yatani, China has confirmed to accord Kenya similar financial treatment