Editorials

Put the funds freed up in debt holiday to good use

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Treasury building. FILE PHOTO | NMG

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Summary

  • The Paris Club international creditors on Monday announced it had accepted a request by Kenya for a Sh32.9billion debt service suspension from January to the end of June this year.
  • This, the creditors said, is to enable the country deal with the socio-economic impact of the Covid-19 pandemic.
  • The Treasury disclosed that it had also applied for a debt relief estimated at Sh40.6 billion from non-Paris Club members, which is due from January 1 to June 30.

The Paris Club international creditors on Monday announced it had accepted a request by Kenya for a Sh32.9billion debt service suspension from January to the end of June this year.

This, the creditors said, is to enable the country deal with the socio-economic impact of the Covid-19 pandemic.

The Treasury disclosed that it had also applied for a debt relief estimated at Sh40.6 billion from non-Paris Club members, which is due from January 1 to June 30.

This is encouraging given the dire socio-economic challenges being experienced in the country. A sharp economic decline since March 2020 has left the country badly exposed and struggling to finance basic services such as healthcare and education.

The debt relief means the country has a window to divert the loan repayment funds to more urgent programmes that would help restore economic progression and lift millions of people out of the current mess.

We must, however, be alive to the fact that the success of debt repayment relief is not guaranteed as has been witnessed in some poor nations.

It takes fiscal discipline on the part of the recipient country for the socio-economic restoration initiative to flourish.

In Kenya we have had a history of wastage or blatant theft of public funds by some rogue officials and political cronies. The country is particularly on a delicate curve where we are faced with a General Election next year.

Crooks are known to take advantage of disruptions and confusion around such times to pinch coins from the public coffers for their own selfish use.

The funds released through the debt repayment relief initiatives must be put to proper use or the whole gesture would be rendered useless.

The government must draw up a proper strategy and expenditure plan for these funds so as to maximise the impact they would have on the economy. This demands for proper tracing and accountability of every coin that is targeted for public use.

The international creditors should hold the government to account for the funds so that we don’t end up with wastage or lining the pockets of crooks.