Wednesday, July 3, 2024 - President William Ruto's economic advisor David Ndii has warned of a deep recession should the country fail to meet its debt obligations.
In response to questions by Kenyans on X, Ndii noted that there would be repercussions should Kenya fail on its obligations despite the tough economic times that have been exacerbated by Ruto’s refusal to sign the Finance Bill 2024, which will deny his government a whopping Sh300 billion.
A deep recession is a period of economic downtime characterized by mass job losses, a rise in unemployment, and a rise in consumer goods.
"You must tell them to be realistic. What's the worst if we default?" Mutisya Willy stated.
"A deep recession," Ndii responded.
Kenya's outstanding debt as of March 31, 2024, was Ksh10.4 trillion for domestic and foreign debts.
However, domestic debts take a majority of the debt portfolio.
Ksh 5.16 trillion is owed to external lenders while the country owes Ksh5.26 trillion to domestic lenders such as banks.
According to the Office of the Controller of Budget, the strengthening of the shilling has helped reduce the debt portfolio to Ksh1 trillion.
The majority of the external debt is owed to countries like China and multinational lenders such as the World Bank and the International Monetary Fund (IMF).
Notably, Kenya has already paid the USD 2 Billion Eurobond that was due next month.
On the other hand, President William Ruto has assured that the government will meet all the debt obligations hence his push for Kenya to raise its own revenue.
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