Kenyan presidential adviser rules out default as cash crunch delays salaries

Kenyan presidential adviser rules out default as cash crunch delays salaries

Kenya said it would not default on its debt repayment obligations as the government delayed payment of civil service salaries due to a cash squeeze caused by massive interest payments.

David Ndii, Kenyan Presidential Adviser on Economic Affairs, said Nairobi had no plans to go down the old route.

“We are not insolvent. We can finance repayments. It is a significant sacrifice but we are actually able to pay,” Ndii told Citizen TV late on Monday.


President William Ruto won a hotly contested election in August 2022 on a platform of planning to lift millions out of poverty and is now facing challenges from the high cost of living and growing debt repayments.

The debt burden, compounded by a weakening local currency and international market turmoil precipitated by a banking crisis, has caused some market participants to speculate that Kenya could soon default like Zambia and Ghana.

Ndii said default was a bad idea, since it would force the government to “spend the next three to four years in very protracted debt restructuring negotiations.”

He said annual interest payments on the domestic debt alone have surged to 680 billion shillings ($5.09 billion) this year from 180 billion shillings nearly a decade ago when the debt binge started, heaping pressure on the government’s cash flow.

“That unfortunately is the law of the land for quite a while,” he said.

The government was failing in one of its most basic obligations by failing to pay its workers, said Opiyo Wandayi, the leader of the opposition in the national assembly.

“Civil servants and MPs have gone to Easter without salaries,” he said in a statement issued during the weekend.

He did not respond to a request for comment on Tuesday but another lawmaker told Reuters the salaries were sent to bank accounts on Tuesday morning.

Lawmakers had not received their March salary by April 7, a delay from the usual payment time before March 26-30.

Ndii attributed the delays to the liquidity challenges posed by the rising repayment of debts.

Finance Minister Njuguna Ndung’u did not respond immediately to a request for comment.