By CultureBanx Team
- Kenya receives $750M in International Development Association credit
- The country currently has $50B worth of debt
The World Bank has approved a $750 million International Development Association (IDA) credit to support Kenya’s economy. As debt continues to cripple Kenya’s economy they have yet to heed the International Monetary Fund’s (IMF) advice to improve its revenue collection mechanisms and effectively limit borrowing.
Why This Matters: This latest financial support from the World Bank to Kenya’s government will be to support its “Big Four” agenda which prioritizes agriculture, affordable housing, universal health coverage, and manufacturing. The operation will also provide support to the government’s medium-term fiscal consolidation plan to improve revenue mobilization, public expenditure and the prudent management of Kenya’s debt.
Right now Kenya’s average loan grace period has dropped from 10 years to an average of four years, exposing the country to a vicious debt cycle
Kenya’s Central Bank Governor Patrick Njoroge had originally stated the country was not desperate to renew a $1.5 billion IMF loan, even as the government struggles to raise money to meet its maturing debt obligations. Right now Kenya’s average loan grace period has dropped from 10 years to an average of four years, exposing the country to a vicious debt cycle.
Let’s try to quickly untangle Kenya’s web of debt. The country’s total debt has been growing at a faster rate in the past six years, moving from $16 billion in June 2012 to currently $50 billion, according to CBK data. Kenya will soon start repaying a $2.8 billion debt Eurobond it received in June 2014 to retire a $600 million syndicated loan taken in 2012.
What’s Next: Only time will tell if this new cash injection will actually help Kenya enhance its growth, accelerate poverty reduction and help it become a middle-income industrialized country by 2030.
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