End Borrowing Binge to Avoid Debt Default

Kenya has a 35 per cent chance of defaulting on its sovereign debt in the next five years, according to a Financial Times survey, The Star reported. The most likely defaulter is Argentina with a probability of 55 per cent but Zambia has just defaulted on its sovereign debt. Debt restructuring is a possibility but lenders like China may reject it and  seize securities like Mombasa port. Even if that is avoided, Kenya will still pay more for its international borrowing because lenders perceive greater risk. Kenya’s public debt quadrupled from $8.55 billion in 2009 to $34.2 billion, around 20 per cent of which is owed to China. Local companies in Kenya are finding it increasingly difficult to get paid by government as IFMIS is switched off for long periods of time. Read more