Restructuring the debt of Kenya

Paris Club creditors agreed on November 15, 2000 with the Government of the Republic of Kenya to a restructuring of its external debt. This agreement follows the International Monetary Fund's successful approval of an arrangement under the Poverty Reduction and Growth Facility in July 2000, of which the first-year program was modified in October 2000 in order to take into account the impact of the severe drought experienced in the recent months by Kenya.

This agreement consolidates roughly US$ 300 million. This amount is broken down between US$ 23 million in arrears as of July 1, 2000 (of which US$ 6 million of official development assistance loans) and US$ 277 million of maturities in principal and interest falling due from July 1, 2000 up to June 30, 2001 (of which US$ 111 million of ODA loans).

The rescheduling is structured on the following terms : ODA credits are to be repaid over 20 years, with 10 years of grace, at interest rates at least as favourable as the concessional rates applying to those loans ; commercial credits are to be repaid over 18 years, with 3 years of grace with progressive repayment, at market rates of interest.

This agreement is expected to reduce debt service due to Paris Club creditors during fiscal year 2000-2001 from US$ 392 million down to US$ 104 million, which consists in payments of interests on the rescheduled amounts, payments on maturities on post-cut-off-date debt and clearance of arrears due according to its previous Paris Club agreement.

On a voluntary and bilateral basis, each creditor may also undertake debt for nature, debt for aid, debt for equity swaps or other local currency debt swaps.

This debt restructuring is expected to make an important positive contribution to Kenya's economic outlook. After a comparable effort from other official creditors and from private creditors, this rescheduling will satisfy Kenya's financing requirements for fiscal year 2000-2001 (July 1, 2000-June 30, 2001).