Nairobi — Kenya has not yet applied for the G20 Debt Service suspension initiative, a plan aimed at supporting middle-income countries weather the COVID-19 pandemic.
In a statement, Treasury Cabinet Secretary Ukur Yatani said the government is seeking a cautious approach in evaluating the costs and benefits of the offer and make an informed decision to safeguard the economic and financial standing of the economy.
"Some countries have faced challenges in re-arranging debt service with undesirable outcomes. In this respect, Kenya seeks a cautious approach in evaluating the costs and benefits of the offer and make informed decisions to safeguard the economic and financial standing of the country," said Yatani.
The initiative was introduced in May this year by G20 countries when they offered to suspend debt services for external for middle-income countries facing economic crisis occasioned by the coronavirus pandemic.
Yatani noted that the country's economy remains well anchored following a raft of fiscal and policy interventions and the reopening of the economy, where the government remains keen in seeking ways to support the health sector at this time.
"Kenya welcomes the intervention among others in form of financial support targeted to the health sector," reads the statement.
The pandemic has caused the government's budget deficit to swell to 8.2 percent of GDP in the financial year to the end of June, from an initial forecast of under 7percent, mainly due to reduced tax collection and foregone revenue in the form of VAT and income tax cuts.
As of now, the government is in talks with the International Monetary Fund for a program to anchor Kenya's fiscal policy to stabilize the economy and address emerging vulnerabilities.
Kenya's public debt hit Sh7.12 trillion in September, a Sh1 trillion rise since September last year.
Yatani's statement was triggered by reports in the local dailies saying that Kenya is seeking Sh75 billion debt suspension.