What does china dept service suspension mean for Kenya?

China said it holding talks with Kenya for a possible dept service suspension to help the country recover from the economic knocks of the coronavirus pandemic. Just what does this mean for the country? Speaking in an interview with privately-owned SpiceFM radio station, Yatani said in an interview, ” “We are now not going to pay immediately, but we are going to pay in the future, ” referring to the figure of 27 billion shillings which was falling due. So is this a good thing or will it end up causing more disaster? Only time will tell.

COVID-19 has dealt a major blow to world’s poorest countries, causing a recession that could push more than 100 million people into extreme poverty.

That is why the World Bank and the International Monetary Fund urged G20 countries to establish the Debt Service Suspension Initiative. The DSSI is helping countries concentrate their resources on fighting the pandemic and safeguarding the lives and livelihoods of millions of the most vulnerable people. Since it took effect on May 1, 2020, the initiative has delivered about $5 billion in relief to more than 40 eligible countries.

While China could make a difference, multilateral lenders, other countries and their private sectors must also find ways to do their part not only by providing debt relief themselves but also by shifting how they see “debt risks” going forwards. Without these shifts, action by African governments and the Chinese government could be in vain.

The effects of Chinese debt suspension is expected to differ depending on which sectors the loans have been focused on. As we know, Chinese loans for different sectors have different costs, and projects in different sectors also have different effects on economic growth in the receiving countries. This means the impact of suspension may not necessarily be long-term.

The country is also expecting to receive an additional 40.6billion debt waiver from the members, not part of the G20 Dept Service Suspension initiative this will help the country use the revenue it receives to tackle the Covid 19 pandemic.

What matters at the end of the day is whether or not the country will use the money it was supposed to pay responsibly. Even more importantly when times come for them to pay up they have acquired enough revenue to be able to pay back the debt they own. Hope the country uses this opportunity to start solving its debt problem.

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