Kenya’s risk of debt distress now high – IMF

The International Monetary Fund has raised Kenya’s risk of debt distress to high from moderate due to the impact of the coronavirus crisis.

The East African nation’s debt stood at 61.7 per cent of GDP at the end of last year, up from 50.2 percent at the end of 2015, the IMF said, driven up by gaping budget deficits that were caused by large infrastructure projects such as a new railway line, according to Reuters.

“The risk of debt distress has moved to high from moderate due to the impact of the global COVID-19 crisis which exacerbated existing vulnerabilities,” the fund said in an assessment published on Tuesday.

The government has responded to the crisis with a range of fiscal measures, including cuts to value-added and income taxes, which have worsened a number of indicators, the IMF said.

The debt load, however, still remained sustainable, the fund added. Last week, it approved $739 million in emergency funding for Kenya to help it tackle the COVID-19 crisis.