Kenya’s external debt portfolio has risen further after the International Monetary Fund approved a Sh255 billion loan for Nairobi to aide combat the Covid-19 pandemic.
The loan has been structured in two tranches with an immediate initial disbursement of Sh33.7billion while an additional Sh79billion will be released in the second tranche by June this year.
National Treasury cabinet Secretary Ukur Yattani said the monies would be used to support the next phase of the Covid-19 response and address the urgent need to reduce debt vulnerabilities.
The financing is under the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF).
The country’s rising debt level comes amid mounting calls for the government to manage its national debt to rescue the economy from collapsing including restructures and reschedules of national debt.
“The balance will be disbursed following subsequent programme reviews conducted approximately every six months,” Treasury Cabinet Secretary Ukur Yatani said.
Treasury says the 38-month programme will help scale up Covid19 response; reduce debt vulnerabilities; address weaknesses in state-owned enterprises; and support financial stability.
The CS said the country pursued the loan as the early measures announced by the government to the effect of tax reliefs, expanded health spending, and social interventions such as Kazi Mtaani set forth the need for additional cash.
The government says this was coupled with “uncertainties over the evolving nature of the Covid-19 pandemic as unsteadiness surrounding the supply of vaccines.”
“These require that the government be adequately resourced to make prompt and targeted interventions,” Yatani said in a statement.
“It is against this background that the government requested this disbursing programme, so as to cover these fiscal needs, by providing the additional resources.”
Yatani said the Treasury is confident that the support and reforms in the deal will go a long way to mitigating the effects of the pandemic and help achieve budget objectives.
“The granting of this request is not only timely but also an expression of confidence in the soundness of the extended credit facility programme.”