Opinion: Kenya’s lenders should cancel all FY 2020/21 loans to help fight Covid-19

This year’s World Health Day, comes amid an unprecedented global crisis.

It is for this reason that more than 100 organisations are calling for developing countries’ external debt to be cancelled to help fight the Covid-19 health and economic crisis.

Cancelling Kenya’s external debt payments for FY 2020/21 would free up approximately KSh343 billion.

A recent analysis by IPFK indicated that; holding all other factors constant, as at 19 March 2020, a week after the confirmation of the first COVID-19 case, Kenya’s external debt had increased by approximately KSh86.5 billion from December 2019 due to depreciation of Kenyan shilling against the US dollar.

This implied a possible wipe out of the projected revenue growth for FY 2020/21 of KSH 89.8 billion and hence posing a threat to delivery of quality services to citizens. Especially at this time when citizens require quality healthcare.

The Institute calls for the permanent cancellation of all external debt payments due in FY 2020/21 by Kenya with no accrual of interest and charges and no penalties. The freed-up funds should be channelled towards the fight against corona Virus.

Other calls include provision of additional, fresh emergency finance that does not create more debt, transparency and accountability to be exercised in the management of freed-up and emergency finances to ensure effectiveness in the utilization of the finances and the provision of personal protective equipment (PPEs) and ventilators by the government to all essential services providers, especially the frontline health workers.

Further, the government needs to use freed up and emergency resources to ensure that critical supply chains for vaccines and reproductive health commodities is not disrupted.

This opinion is extracted from a statement issued by James Muraguri, the Chief Executive Officer and Board Secretary of the Institute of Public Finance Kenya (IPFK).

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