Developing Nations At Risk Of Debt Crisis

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President William Ruto’s government is currently experiencing a challenge on how to balance the populist promises he made with the reality that is the actual state of affairs in terms of the debt ceiling.

This has been seen in the backdrop of a delay in paying civil servants’ salaries with the government admitting to financial difficulties.

According to Deputy President Rigathi Gachagua, some government loans matured last week, forcing the government to pay the debt, and leaving the government with no money to pay civil servants.

“It is true we are having challenges in paying salaries, giving money to governors. Because the handshake gov’t ripped this country, they borrowed money left right, and center. Because we are a responsible government, we have to pay this money,” he said. 

“What we collected the last two weeks was sufficient to pay the loans. What we are collecting this week will pay salaries and other requirements,” he added.

However, according to the latest reports by Aljazeera Kenya is not the only developing country that is grappling with debts, Sri Lanka, Zambia, and Ghana have already defaulted on their overseas debt and are working towards debt reworks with creditors.

News reports by the world’s news site Aljazeera indicate that a number of developing nations are at risk of a debt crisis, with ballooning inflation escalating borrowing costs and a strong dollar jacking up the cost for borrowing countries to repay loans and raise more money.

United States Treasury Secretary Janet Yellen has now called for a meeting on Wednesday in a bid to come up with an urgent resolution of requests by Zambia and Ghana for restructuring of their sovereign debts and moves to conclude a debt treatment for Sri Lanka.

The meeting will constitute officials from World Bank, the International Monetary Fund (IMF), and the debtor countries.

World Bank chief David Malpass said on Monday he hoped meetings this week with Chinese officials could help “break the ice” on badly needed debt relief for the developing countries.

SOURCE: ALJAZEERA

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