This archive report was first published on 15 May 2020.
Kenya's finance minister, Ukur Yatani, has announced that the country will not seek a suspension of debt payments under the G20 initiative aimed at helping poor countries weather the COVID-19 pandemic.
Speaking to Reuters, Yatani expressed concerns over the restrictive terms of the deal, which he believes could hinder Kenya's ability to finance its deficit later in the year.
"We fear we might unnecessarily create a crisis," Yatani said, highlighting the potential impact on Kenya's credit rating.
Instead, Kenya is engaging creditor countries individually to secure moratoriums on debt service payments lasting around a year.
"We have not concluded (negotiations), but it is progressing well," Yatani said, adding that the country is seeking debt relief from bilateral creditors to safeguard its sovereign credit rating.
Kenya's external debt stands at 3 trillion shillings ($28 billion), with a third owed to private creditors, including holders of the country's two Eurobonds.
The pandemic has caused the government's budget deficit to swell to 8.2% of GDP, but Yatani is optimistic that the deficit will narrow to 7.3% in the 2020/21 fiscal year and to 4.2% by 2023/24.
Moody's downgraded Kenya's outlook to negative from stable on May 7, citing the shock caused by the COVID-19 pandemic to its tourism industry and farm exports.
On Tuesday, the IMF raised its risk of debt distress to high from moderate.
Yatani sought to assure investors, saying: "We have adequate reserves to manage our payments for the next one year."
The government has included a 55 billion shillings stimulus package aimed at preserving employment and consumer demand in the budget for the next fiscal year.
