This archive report was first published on 16 May 2020.
Kenya has chosen not to participate in the G20 debt relief initiative, opting instead to negotiate with individual creditors for a moratorium on debt payments. According to Treasury CS Ukur Yattani, the G20 program's restrictive terms pose a significant risk to Kenya's ability to finance its deficit later in the year.
Published on May 16, 2020, the G20 program aimed to provide relief to developing countries struggling with the COVID-19 pandemic by freeing up over $20 billion for health services. However, Kenya's debt portfolio is structured in a way that the G20 initiative does not offer optimal benefits, Yattani explained.
“The G20 debt relief initiative does not offer optimal benefit given the structure of Kenya’s debt portfolio,” Yattani said in an interview with Reuters. “Every country adapts to the situation based on its circumstances.”
Kenya is currently engaging with creditors such as Germany, Sweden, Japan, China, and France to secure a moratorium on debt payments for at least a year. While the country has not yet concluded deals with these creditors, Yattani remains optimistic about the outcome of the negotiations.
The Treasury CS also expressed concerns about the potential impact of the G20 initiative on Kenya's credit rating. “Kenya is taking a cautious approach of seeking debt relief from bilateral creditors to safeguard its sovereign credit rating,” Yattani said.
Kenya's decision to opt out of the G20 initiative comes at a time when the country is facing significant economic challenges, including a rapidly deteriorating financial health and huge debt levels. Moody's recently revised Kenya's rating to negative, citing the country's deteriorating financial health.
