Ruto Proposes Debt Restructuring Law to Ease Economic Pressure
President William Ruto proposed a new law on Thursday, June 22 that would allow Kenya to restructure its debt and reduce the need for austerity measures during difficult economic times.
Ruto stated, during a roundtable discussion in Paris, France, that restructuring debt will enable Kenya and other African governments to meet their credit obligations.
Creditors were requested to adopt a new law granting countries 50 years to pay off their maturing debt, with a grace period of 10 to 20 years.
The new debt repayment policy, according to the President, will allow his administration to save approximately Ksh1.4 trillion (USD 10 billion) annually.
A portion of the savings will be redirected to stimulate other sectors of the economy and lessen reliance on loans to finance development projects.
“Let’s agree that the money we’re obligated to pay over the next ten years for debt repayment will be converted into a 50-year loan with a 20-year grace period so that you won’t have a problem with your credit rating.
“For example, Kenya pays Ksh1.4 trillion (10 billion USD) to service its debt. If I had Ksh1.4 trillion ($10 billion) per year for development instead of paying debt, it would make a tremendous difference,” Ruto said.
In addition, he advocated for the creation of a new multilateral climate action financing mechanism funded by global carbon taxes on fossil fuels and aviation.
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Ruto also requested that the World Bank and the International Monetary Fund relax their monetary policies and permit African nations to enjoy their natural resources.
“Africa does not desire anything gratis. Ruto stated, “We need a new financial model in which power is not concentrated in the hands of a few.”
According to the National Treasury, Kenya’s debt as of 30 March 2023 was Ksh9.6 trillion.
Out of the Ksh9.6 trillion, 5 trillion was owed to external creditors, with the remainder owed to domestic lenders.
Chris Kiptoo, principal secretary of the Treasury, disclosed before the Public Debt and Privatisation Committee that the first budget of President William Ruto included Ksh607.1 billion for debt repayment.
It was anticipated that Kenya would spend Ksh3.6 trillion in the 2023/24 fiscal year.
Ruto Proposes Debt Restructuring Law to Ease Economic Pressure
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