President Ruto calls for debt relief in debut UN address
Debt management continues to be a pervasive theme concerning the fiscal status of developing countries across the globe and it is no surprise the topic featured in Kenyan President William Ruto’s maiden address to the United Nations General Assembly currently underway in New York, US.
The President petitioned multilateral lenders such as the World Bank and the International Monetary Fund (IMF) to release all the existing financial instruments to provide much-needed additional liquidity and secure better fiscal space for developing countries like Kenya.
“On behalf of Kenya, therefore, I join other leaders in calling upon the World Bank, the International Monetary Fund and other multilateral lenders to extend pandemic related debt relief to the worst hit counties, especially those affected by the devastating combination of conflict, climate change and Covid-19,” said Dr Ruto.
Dr Ruto noted that the economic downturn ensuing from the pandemic undercut the fiscal placement of emerging economies and despite measures to attenuate the carnage wrought by Covid-19, developing countries still needed international support to navigate the post-Covid era.
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“Developing countries being heavily burdened by external debt servicing run the risk of losing development gains due to the shocks inflicted by the pandemic and associated disruptions.
“Kenya and the rest of Africa, like other developing nations, are in need of greater international partnership and cooperation to avert economic an crisis in the wake of the pandemic,” said the President.
Dr Ruto’s plea to the international community and multilateral lenders is opportune considering Kenya is stretched thin in its debt obligations after latest financial data showed the country expended 63.5 percent of July and August tax revenue to pay creditors.
With debt repayments gobbling up that much of the country’s tax revenue, the government is left with insufficient money to cater to its budgetary needs which prompt further borrowing or renegotiating terms of repayment for current loans.
Treasury analysts anticipate that debt servicing costs for the current fiscal year will continue trending upwards and close at Kes1.39 trillion or 67 percent of the Kes2.07 trillion targeted by the Kenya Revenue Authority.