IMF raises Kenya’s risk of debt distress to high from moderate

The International Monetary Fund has raised Kenya’s risk of debt distress to high from moderate due to the impact of the coronavirus crisis, it said in an assessment published on Tuesday.

The East African nation’s debt stood at 61.7 percent of GDP at the end of last year, up from 50.2 percent at the end of 2015, the IMF said, driven up by gaping budget deficits that were caused by large infrastructure projects such as a new railway line.

“The risk of debt distress has moved to high from moderate due to the impact of the global COVID-19 crisis which exacerbated existing vulnerabilities,” the fund said.

The government has responded to the crisis with a range of fiscal measures, including cuts to value-added and income taxes, which have worsened a number of indicators, the IMF said.

The debt load, however, still remained sustainable, the fund added. Last week, it approved US$739 million in emergency funding for Kenya to help it tackle the COVID-19 crisis.