President William Ruto called for reforms to the international credit rating and debt sustainability systems.
The Head of State, speaking at a meeting of the Belt and Road Initiative summit in Beijing, China, revealed that the international financial system was unjust to many African countries, including Kenya.
According to Ruto, the unjust international financial system has significantly slowed the growth and development of most countries in the far Global South.
He thus urged China to collaborate with African countries to help restructure their debts and include longer grace periods.
President Ruto’s appeal comes a month after Moody’s, a global credit ratings agency, downgraded Kenya’s ability to obtain external loans, citing the government’s inability to deal with its mounting debt.
Moody’s downgraded Kenya’s credit rating to “Caa1” from “B3” and predicted that the country’s debt affordability would remain low for a longer period.
According to the credit rating agency, the government’s decision to withdraw the Finance Bill and instead rely on budget cuts to reduce the fiscal deficit may have implications for Kenya’s financing requirements.
“The negative outlook reflects downside risks related to government liquidity,” read part of a statement by the credit rating agency.
“Slower fiscal consolidation would risk constraining external funding options even more, including diminishing support from multilateral creditors which have been the largest source of external financing,” the statement added.
A fortnight later, another global credit rating agency, S&P, downgraded Kenya’s rating to “B-” from “B,” citing the repeal of the Finance Bill 2024, which slowed the country’s fiscal consolidation.
“The downgrade reflects our view that Kenya’s medium-term fiscal and debt outlook will deteriorate following the government’s decision to rescind all tax measures proposed under the 2024/2025 Finance Bill,” S&P said in a statement.
Meanwhile, during the summit in China, Ruto urged stakeholders to double their contributions to the World Bank’s International Development Association (IDA), which helps countries like Kenya access low-interest loans.
“This will enable more African countries to access concessional funding. It will support economies that are heavily affected,” Ruto commented.
“I urge all my colleagues to participate in this endeavour to position Africa’s perspective and ideas appropriately in global discourse,” he added.
He went on to praise China and African countries’ collaboration on transformative programmes, stating that Africa needed a solid foundation to achieve a radical turnaround.
According to him, the reforms would strengthen Africa’s collective ability to address complex global issues such as unemployment, poverty, climate change, inequality, and political instability.
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