State outlines plan to reduce business loans
DEBT: National Treasury Cabinet Secretary Ukur Yatani has outlined the government’s plan to scale down on commercial loans as part of Kenya’s debt management strategy.
This comes on the back of the runaway public debt which now stands at Sh6.2 trillion, just Sh3.8 billion shy of the Sh10 trillion gross domestic product (GDP).
In his budget statement yesterday, Yatani said the government will target more concessional loans that are advanced on terms that are substantially more generous than market loans.
“The government is committed to implement the 2020 Medium-Term Debt Strategy which recommends a shift towards concessional external borrowing and lengthening of maturity structure of the domestic debt,” he told Parliament.
“In addition, the Debt and Borrowing Policy approved in early 2020 will guide the management of public debt.”
Addressing the press on the sideline of the national budget presentation, Yatani insisted that the government will not yield to G20 debt relief initiative over their restrictive terms.
He cautioned that the move will block Kenya from accessing the market for additional borrowing.
Investment Analyst Aly-Khan Satchu told Business Hub that the prevailing Covid-19 economic climate portends more doom for the local economy which is struggling to meet it loan obligations.
“It is highly unlikely that Kenya will post a positive GDP outcome this year. The trifecta (forecast) of tourism hard stopped, remittances down around 20 per cent and floriculture deep under water,” he said.