At least 40 countries, including Kenya, have received in excess of Ksh.593.96 ($5 billion) in debt relief through the Debt Service Suspension Initiative (DSSI).
According to the World Bank, the initiative, which came into effect in May 2020, has seen countries on board the program to be able to save money that is used to cushion citizens against the effects of the pandemic.
“The World Bank and the IMF are supporting implementation of the DSSI by monitoring spending, enhancing public debt transparency, and ensuring prudent borrowing. DSSI borrowers commit to use freed-up resources to increase social, health, or economic spending in response to the crisis,” said the Wold Bank.
In January, Kenya’s request for debt service suspension was approved by the Paris Club of Major economies.
The move resulted in the suspension of debt service due from January 1 to June 30, 2021.
This gave Kenya Ksh.32.9 billion in potential savings for the six-month period.
The Paris Club said at the time that Kenya committed to channel the cash freed by the initiative to mitigate the health, economic, and social impact of the COVID-19 crisis.
Kenya further expressed interest to seek from other bilateral official creditors a debt service treatment that is in line with the agreed terms of the DSSI of the G20.
Out of the 197 countries in the world, only 73 countries are eligible for a temporary suspension of debt-service payments owed to their official bilateral creditors.
While many countries are eligible, some have opted out of the DSS Initiative. Among these countries include Ghana that is in high risk of defaulting, Liberia and Somali which is already in debt distress among many others.
