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Kenya cools talk on debt default as delay in public service salaries continues

Published

2 years ago

April 11, 2023

President William Ruto’s chief economic adviser, David Ndii has maintained that the country will not default on its debt repayment obligations despite delayed payment of civil service salaries.

“Nairobi has no plans to go down that route”, said Ndii.

“We are not insolvent. We can finance repayments. It is a significant sacrifice but we are actually able to pay,” he added on Monday.

He said default was a “very bad idea” since it would force the government to “spend the next three to four years in very protracted debt restructuring negotiations.”

The delay has been due to a cash squeeze caused by massive interest payments. There are speculations Kenya could default on its loan deals like Ghana and Zambia.

Kenya’s debt has increased from 180 shillings nearly ten years ago to 680 billion shillings ($5.09 billion) this year, placing additional strain on the government cash flow.

Meanwhile, the situation has drawn reactions from the leader of the opposition in the national assembly, Opiyo Wandayi.

“Civil servants and MPs have gone to Easter without salaries,” Wandayi said in a statement issued during the weekend. Lawmakers had not received their March salary by April 7, a delay from the usual payment time of between March 26-30.

The International Monetary Fund recently warned public debt and inflation in most African countries were at “levels not seen in decades” and says several countries face “difficult sociopolitical and security situations.”

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IMF mission concludes 4th loan program assessment in Egypt

Published

9 hours ago

November 22, 2024

Ifeoluwa Dada

Following the completion of a recent visit to Egypt, the International Monetary Fund (IMF) has announced that its mission had achieved significant strides in policy talks aimed at concluding the fourth review of the IMF loan program.

The review is the fourth in Egypt’s most recent 46-month IMF loan program, which was authorised in 2022 and increased to $8 billion this year following an economic crisis characterised by high inflation and chronic foreign exchange shortages. It may unleash more than $1.2 billion in financing.

Along with reaffirming its commitment to maintain a flexible exchange rate system, the IMF stated that Egypt “has implemented key reforms to preserve macroeconomic stability,” including the unification of the currency rate that facilitated imports.

Earlier on Wednesday, Egypt’s Prime Minister Mostafa Madbouly said Cairo has asked the IMF to modify the targets for the programme not only for this year, but for its full duration, he added without giving more details.

“Discussions will continue over the coming days to finalize agreement on the remaining policies and reforms that could support the completion of the fourth review,” the IMF added in its statement.

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Kenya seeks $750m from World Bank, obtains $200m from AfDB— Official

Published

2 days ago

November 20, 2024

Ifeoluwa Dada

The head of debt management for the finance ministry told Reuters that Kenya had obtained a $200 million loan from the African Development Bank (AfDB) and was negotiating a fresh $750 million loan with the World Bank.

After being forced to abandon proposed tax rises costing more than 346 billion shillings ($2.68 billion) in June due to fatal demonstrations, the East African nation’s administration, which has been grappling with significant debt, has been frantically seeking fresh funding.

The Finance Ministry’s public debt management office director general, Raphael Owino, told Reuters that the IMF’s October clearance of the seventh and eighth reviews, which opened the door for a $606 million loan tranche, had aided the ministry’s talks for more loans.

“The World Bank is coming on board, riding on the back of IMF receipts,” Owino said. “The AfDB is already on board.”

The discussions for more assistance, which came under the World Bank’s “Development Policy Operations” (DPO) with the government, were confirmed by a representative at the organization’s Kenya office.

“The amount of the current (loan) is yet to be determined. The amount will also depend on the implementation of the policy reforms agreed upon,” the spokesperson told Reuters, adding that past DPO loans averaged about $750 million.

In May, the World Bank approved the latest round of DPO loans, totalling $1.2 billion.

According to a statement made last month by Finance Minister John Mbadi, Kenya has set a foreign borrowing goal of 168 billion shillings for the fiscal year ending in June 2025.