Kenya should renegotiate its foreign debts, says Mudavadi

Amani National Congress (ANC) party leader Musalia Mudavadi wants Kenya to renegotiate bilateral and multilateral debts with its external lenders, including those in the Eurobond market, due to the Covid-19 pandemic.

In an exclusive interview with the Nation, the ANC leader said Kenya should ask the lenders to relax debt repayment terms or have some loans written off in the wake of the virus crisis that is taking a heavy toll on the economy.

"Kenya should move swiftly to the negotiating table with our creditors and ensure there is rescheduling of loan repayment terms because we are headed to very difficult economic times. Let us have a round table with our creditors like China and others and negotiate on how to get out of the multi-trillion debt shackles as we plan to rebuild the already ailing economy," said Mr Mudavadi.

INTEREST WAIVERS

Mr Mudavadi said the lenders can give waivers on interests or defer repayment of the loans by restructuring them. He cited such loans like those borrowed for building of the standard gauge railway (SGR), dams and other mega projects in the country.

"The debt status of our country must worry us in this season of the Covid-19 pandemic, especially because the shilling is sliding against the dollar. Even before the outbreak of the disease, Kenya was already in a bad place, which the virus will worsen. Our public debt, especially, has soared over the past seven years due to impulsive borrowing," he said.

RATIONALISE PROJECTS

The ANC leader urged the government to quickly rationalise its projects and programmes due to the heat of the pandemic and prioritise on renegotiating the country's debts.

"Kenya's national debt hit the permitted borrowing ceiling of Sh6 trillion years back and the Senate approved a Sh9 trillion ceiling. The situation is already bad. But some countries like China owe Kenya some level of compassion and comfort and should open space for renegotiation and rescheduling of loans," added Mr Mudavadi.

The former Finance minister has also proposed a five year recovery strategy which he says should involve the formulation of a national policy that will guide the country post-Covid-19.

RESTORE ECONOMY

While lauding President Uhuru Kenyatta’s administration for various efforts it has made to cushion Kenyans from the impact of the coronavirus, Mr Mudavadi said more needs to be done to ensure there are long-term measures in place to restore the economy.

He said Kenya should, for instance, plan to create incentives through a policy that will encourage and increase investor confidence on a long term basis.

"After we successfully contain the pandemic, the country should also relook [each] sector like for instance tea, hides and skins, horticultural, export sector among others and ensure proper efforts are applied to revive the sectors," said Mr Mudavadi.

"Some other areas like the tourism sector will take long before they recover. But we also need to begin rethinking local tourism as opposed to international tourism to revive the sector and also [offer] incentives to such businesses, "he added.

AGRICULTURE

The ANC boss also asked the government to prioritise proactive contingency measures to cushion critical sectors like agriculture.

Mr Mudavadi urged the government to work with bodies like the Kenya National Chamber of Commerce and Industry (KNCCI) and the private sector to offer support and extend incentives to small-scale businesses in order to mitigate the effects of Covid-19 and help them make a comeback after the pandemic.

"The government should, together with banks and other lending institutions, establish policies to ensure there is easy flow of credit to small-scale businesses to help them stay afloat after the Covid-19 menace. Given that over 80 per cent of Kenyans eke their living from the informal sector, it is important that urgent measures are taken to cushion them," Mudavadi said.

STREAMLINE KRA

He also asked the government to streamline Kenya Revenue Authority’s targets to avoid overburdening the agency.

Mr Mudavadi now wants all leaders to stop politicking and reunite to fight the spread of the pandemic as well as planning for the revival of the economy that has been paralysed by the coronavirus.

"As leaders, this is a time to be honest and candid. I appeal to leaders to unite and put emphasis on fighting the pandemic and strategising on the best ways to heal the economy after the pandemic," added the ANC leader.