PREVIEW
Financial pressures are mounting on President William Ruto's government but his chief economic advisor rules out debt restructuring
The Treasury in Nairobi says that it is expecting some $1.9 billion in emergency funding from the World Bank, the IMF and a consortium of foreign commercial banks over the next two months to shore up currency reserves badly depleted by heavy debt payments and a 20% drop in the shilling's value against the US dollar.
The new loans should include $1bn from the World Bank in May; $300 million from the IMF in June; and $600m from a syndicate of foreign commercial banks in June.
Last week, President William Ruto's chief economic advisor David Ndii conceded that the Treasury is facing an acute cashflow crisis that has unprecedentedly delayed public service salaries but insisted that the government could meet its repayments (AC Vol 63 No 19, Ruto plays the economy blame-game). 'It is a significant sacrifice, but we are actually able to pay,' said Ndii.
The possibility of debt restructuring talks was played down by the IMF's Africa director, Abebe Aemro Selassie telling reporters on 14 April that Kenya 'is not a country that we are expecting to do debt restructuring.'
Despite these assurances, Kenyan lawmakers mooted the prospect of debt relief under the G20's Common Framework on the sidelines of last week's Spring Meetings of the Bretton Woods institutions. Shortly afterwards, the Chairman of the National Assembly Finance and National Planning Committee Kuria Kimani admitted that the country is in debt distress
'It is not a secret that we are in debt distress. We need urgent intervention to prevent a default,' Kuria said.
Ministers have kept diplomatically quiet about the government's debt difficulties. Ndii has been explaining the pressures caused by the strong dollar and bond maturities but has strongly criticised waste in the government.
'We have a very profligate government, that I will tell you… [including] the preoccupation with benefits, perks and personal privileges at the top level,' he told local media last week.
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