Kenya’s President William Ruto has asked the World Bank, International Monetary Fund (IMF) and other multilateral lenders to extend new reliefs for debt-burdened African countries to allow them to recuperate from multiple economic shocks.
In his maiden address to the United Nations General Assembly as President on Wednesday (Watch here), Dr Ruto said heavily indebted countries “run the risk of losing development gains due to the shocks inflicted by the pandemic and associated disruptions.”
“I call upon global financial institutions and the international community to take urgent measures and release all existing financial instruments to provide much-needed additional liquidity and secure better fiscal space for developing countries like Kenya,” he said.
Dr Ruto said this will “enhance social investment, support climate change adaptation and mitigation, address security needs and resolve development financing challenges.”
The G20 nations, which represent the majority of Africa’s external lenders, would also do well to expand their common framework to suspend debt repayment for middle-income countries struggling to recover from the pandemic, the President said.
Other African leaders who addressed UNGA before President Ruto also called for debt relief and repayment rescheduling.
While Dr Ruto was speaking about a common problem for most African countries, the issue is particularly personal to him, as he takes up the new role as President of a country heavily indebted.
Kenya is among the most indebted countries in Africa, with its debt stock currently at $70.7 billion, over 68 percent of the country’s GDP as of December 2021. The IMF warned that the country is at a high risk of debt distress.
And as many look up to Dr Ruto to fulfil his numerous campaign promises in his pursuit of the presidency, his administration is left with little headroom to continue borrowing, as the current debt cap is $84 billion.
Besides, the new administration says they inherited dry public coffers and will take time before the government can deliver on the promises – reduce the cost of living and create more job opportunities.
“The situation is very bad. There is no money in the Treasury. And the little that we are collecting goes to payment of salaries,” Deputy President Rigathi Gachagua said in an interview with NTV, a local television, last weekend.
Figures from the Treasury indicate that Kenya spends at least sixty percent of its tax revenue on debt servicing, an issue the President has termed as a clear indication that “we are living beyond our means.”
“This situation must be corrected,” Dr Ruto said in his inaugural speech last week. “I am aware that many individuals, families and their companies have been driven to ruin and forced to shut down over government unpaid bills.”