Global Courant 2023-04-11 18:30:40
Kenya’s annual interest payments on domestic debt alone have risen from $1.34 billion to $5.09 billion in nearly a decade, putting pressure on cash flow.
Kenya will not default on its debt-service obligations, the president’s chief economic adviser said Monday, as civil servants’ salaries were delayed due to a money tightness due to huge interest payments.
The debt burden, exacerbated by a weakening local currency and turmoil in the international market triggered by a banking crisis, has led to speculation that Kenya could soon go bankrupt, just like Zambia and Ghana.
Nairobi has no plans to go down that path, said David Ndii, the president’s adviser.
“We are not bankrupt. We can fund redemptions. It is a significant sacrifice, but we are really able to pay,” Ndii told Citizen TV late Monday.
He said default was a “really bad idea” because it would force the government to “spend the next three to four years in very protracted debt restructuring negotiations”.
Annual interest payments on domestic debt alone have risen from 180 billion shillings ($1.34 billion) nearly a decade ago, when the debt crisis began, to 680 billion shillings ($5.09 billion) this year, Ndii said, bringing government cash flow came under pressure.
President William Ruto won a hotly contested election last August and pledged to lift millions out of poverty, but he faces challenges from the high cost of living and rising debt payments.
This led to two weeks of protests in March organized by veteran opposition leader Raila Odinga.
The government failed to fulfill one of its most basic obligations by not paying its workers, said Opiyo Wandayi, the leader of the opposition in the national assembly.
“Civil servants and MPs have gone to Easter without pay,” he said in a statement released over the weekend.
He did not respond to a request for comment on Tuesday, but another lawmaker told Reuters that the salaries had been deposited into bank accounts by Tuesday morning.
Lawmakers had not yet received their March paychecks by April 7, a delay from the usual pre-March 26-30 payment deadline.
Ndii attributed the delays to the liquidity challenges posed by increasing debt service. Finance Minister Njuguna Ndung’u has yet to comment on the matter.
