By Pauline Odhiambo
Kenyan President William Ruto has proposed a review of debt repayment terms to ease pressure on countries in the global south.
Ruto asked foreign lenders to adopt a new formula allowing countries between 30 and 50 years to clear their debt obligations.
He was speaking during the Summit for a New Global Financing Pact in Paris, France which brought together more than 50 world leaders, including 14 from Africa.
Kenya pays approximately $10 billion annually to offset debt that stands at $68.4 billion as of March 30, 2023.
'Practical'
According to the president, the proposed debt repayment policy is “practical” and will allow his administration to redirect funds into boosting sectors such as health, education and transport, invariably lowering dependency on loans.
Ruto argues that a longer repayment period will allow Kenya and other African governments to honour their debts.
"Let us agree that the money we are supposed to pay for the next ten years as debt repayment be converted into a new law that is a 50-year loan with a 20-year grace period so that you don't have a problem with rating,” Ruto said at a roundtable discussion on Thursday hosted by French President Emmanuel Macron.
Special drawing rights
While addressing Kristalina Georgieva, the Managing Director of the International Monetary Fund (IMF) and World Bank chief Ajay Banga, also present in the discussions, Ruto stressed developing countries’ need for “new money” for debt relief and emergency liquidity.
He also made reference to the special drawing rights (SDRs), the IMF's tool that determines how funds are allocated to borrowers.
“With SDR, (Africa) ended up with $30 billion in a continent of 1.2 billion people. Europe, with 450 million people, ended up with five times what we got,” Ruto said. “Africa does not want anything for free, but we need a new financial model where power is not concentrated in the hands of a few.”
