Kenya’s finance minister stated on Wednesday that the country’s challenges with a significant debt burden and pressure on its foreign currency reserves are not unique, as other nations are grappling with similar circumstances.
Njuguna Ndung’u was addressing a research note from the U.S. investment bank JPMorgan, which was published on Tuesday. The note stated that Kenya was “walking a tightrope” to avert a crisis caused by a maturing dollar bond and ongoing currency weaknesses in the East African nation.
“All low- and middle-income countries are walking a tightrope given the current economic constraints globally. The Kenyan case is being featured because of the Eurobond 2024,” the minister told media, referring to a bond maturing next June.
According to Ndung’u, the forthcoming Eurobond maturity “should not be a big deal” because Kenya can utilize its central bank reserves to settle the debt.
“That will not (however) solve the persistent negative shocks that low- and middle-income countries are facing. A more well mapped set of solutions will be needed,” he said.
In his address to the United Nations General Assembly in New York last week, President William Ruto of Kenya advocated for an extension of the maturity period for sovereign bonds in low-income countries. This extension, he argued, would aid in preventing a financial crisis.
Additionally, he proposed the establishment of a 10-year grace period and the introduction of special drawing rights at the International Monetary Fund for these nations. These special drawing rights, he suggested, should be allocated based on need rather than the customary entitlement mechanism.
