President William Ruto on Wednesday, September 21, called on world leaders and lenders to help the country address it debt burden, which stands at Ksh8.6 trillion.
In his inaugural speech at the United Nations General Assembly in New York, a visibly energetic Ruto called on global leaders to suspend or reschedule debt repayment schemes to help middle-income countries recover from the ravages of the pandemic.
The Head of State further urged lenders such as World Bank, International Monetary Fund (IMF) and other creditors to extend pandemic-related debt relief.
President William Ruto makes his speech during the 77th session of the UN General Assembly in New York, US on September 21, 2022.
William Ruto Ruto, who has been in office for barely a week, argued that Kenya, like other middle-income countries, was still grappling with economic downtime and inflation pressure hence the need to revise loan repayment plans.
“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 countries, especially those affected by the devastating combination of conflict, climate change and pandemic,” Ruto told world leaders on Wednesday, September 21.
“Kenya and the rest of Africa, like other developing countries, are in need of greater international partnership and cooperation to avert the economic crisis in the wake of the pandemic,” he added.
He emphasized that the call, if honoured, would help middle-income countries embark on their development agenda and avert economic crisis.
According to financial experts, world leaders can respond to Ruto’s request by lowering the interest rates, consolidating them, or combining several higher-interest loans into a single lower-interest loan.
The intervention can be applied to help the country from running bankrupt and also avoid defaulting on the loans.
His sentiments come just months after the National Treasury disclosed that Kenya’s debt stood at Ksh8.6 trillion. According to Treasury’s breakdown, external debt is Ksh4.1 trillion, with domestic debt standing at Ksh3.9 trillion.
To help his administration execute its mandate, Members of Parliament of the 12th parliament increased debt ceiling to Ksh10 trillion. The raising was essential to help Kenya Kwanza’s government fund its expenditure.
However, Central Bank of Kenya (CBK) Governor Patrick Njoroge had earlier warned against defaulting on loan repayment.
” Economic consequences of high debt are adverse and legislators have to not only ensure that we repay the debts, but also avoid accumulating more debts as a country,” Njoroge stated.
“Inflation has become endemic in the world economy; it’s not only a Kenyan problem. The global market has significant variations in commodity prices that end up affecting our pricing,” he added.
His message to MPs came after IMF warned former President Uhuru Kenyatta’s administration, revealing that it was spending over 50 per cent of collected tax to service debts.
Former President Uhuru Kenyatta listens as President William Ruto reads his speech at Kasarani Stadium on Tuesday, September 13, 2022