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Good News for Kenya as a 6-month Debt Suspension is Granted

James Musyoki

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Yatani
Photo: Treasury Cabinet secretary Ukur Yatani

Kenya is one of the countries that have benefited from the debt service suspension initiative (DSSI) from ten countries including the United States of America, Japan, and France among others. This is according to an announcement made through a letter by the Paris Club, an informal group of official creditors formed in 1956. The Club’s main role is to find coordinated and sustainable solutions to the payment difficulties experienced by borrower countries.

 

In the letter, the Paris Club unveils that Kenya will enjoy a standstill on part of its external debt for the period falling between January 1st to June 30th, 2021.

 

“In the application of the term sheet of the Debt service suspension Initiative (DSSI) and its addendum also endorsed by the G20, the Paris Club recognized that the Republic of Kenya is eligible to benefit from the initiative. Therefore, the representatives of the Paris Club creditors have accepted to provide to the Republic of Kenya a time-bound suspension of debt service due from January 1 to June 30, 2021,” The Paris Club said in the letter.

 

The suspension of the Kenyan debt will see Kenya save up to Ksh.32.9 billion in foreign debt repayments due to 10 bilateral partners under the Paris Club. Besides, if the DSSI application to the G20 presently consideration goes through, the country stands a chance to save up to Ksh.40.6 billion. This is according to the Treasury Cabinet Secretary Ukur Yatani.

 

Photo: Ukur Yatani, Treasury CS

“In effect, the initiative apart from suspending the payments will give us a total of five years to repay the loans, with a grace period of one year. This is not only timely, but a sign of confidence in the country and will give us the fiscal space to make the much-needed spending on the COVID-19 economic recovery strategy especially in the social, health and economic sectors”, says Yatani.

 

The decision by The Paris Club to suspend Kenya’s external debt comes at a time when the country’s debt has accrued to more than 8 trillion.

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