Kenya’s Treasury officials are basing their debt-restructuring plans on the expectation of a bounce back from the effects of Covid-19 on tourism and commodity exports. Although the budget deficit is predicted to widen to 8.7% of GDP, the government will have to borrow more. Government debt is expected to exceed 66% of GDP and debt-servicing to take up to 27% of state revenue over the next three years. The Treasury plans to raise at least US$1.24bn by June 2022 on the Eurobond market. This move is part of a planned debt restructuring of around $3.5bn of principal repayments. The size of the Eurobond will depend on how much cash the government can raise from the World Bank, the IMF and the African Development Bank. The government’s rapid Economic Stimulus Programme and ‘Post Covid-19 Economic Recovery Strategy’ was supposed to help grow the economy by 5.8% in 2021. That growth target looks unlikely to be met with some restrictions on businesses still in place and the tourism and service sectors still hit by the pandemic.
SOURCE: THE AFRICAN REPORT