By George Obulutsa
NAIROBI (Reuters) -Kenya aims to replace a nominal public debt ceiling with a debt anchor as a percentage of gross domestic product by the end of June 2022, Finance Minister Ukur Yatani has said.
The debt ceiling is set at 9 trillion Kenyan shillings ($80 billion) at present, the finance ministry said.
“The new framework would be centered on… a medium-term
debt anchor set at 55 percent of GDP with debt measured in present value terms,” Yatani said in a Dec. 2 letter to the International Monetary Fund, which the fund made public on Wednesday.
In June this year, total debt stood at 70% of GDP.
The letter did not set a timeframe for when the debt level will be brought to 55% of GDP.
The IMF also said the government had dropped plans to nationalise flag carrier Kenya Airways.
“The authorities do not intend to nationalise the carrier and are considering appropriate mechanisms to protect the Exchequer’s financial interests during the restructuring process,” it said.
The government has a 48.9% stake in the airline.
In his letter, Yatani said the government would take over $827 million of Kenya Airways’ debt.
It will also give the airline $473 million in direct budget support in the fiscal year that ends in June 2022 as well as the subsequent one, Yatani said.
In addition to the cash injection, Kenya Airways, also known by its abbreviation KQ, will have to undertake other measures to turn around its operations, Yatani said.
“KQ will be required to trim down its network, rationalise
frequencies of flights, operate a smaller fleet, and rationalise its staff complement,” he said.
Like other airlines, Kenya Airways has seen its passenger business severely hurt by travel restrictions imposed by governments to curb the spread of COVID-19.
($1 = 113.0000 Kenyan shillings)
(Reporting by George Obulutsa; Editing by Toby Chopra)
