- He said the need for restructuring comes about when the country is insolvent.
- This comes amid salary delays for civil servants for the month of March.
Image: PCS
Chair of the President's Economic Advisory team David Ndii has said it would be a bad idea for the country to start restructuring debt now.
Debt restructuring is when companies or entities seek to renegotiate the terms of loans they took to make it easier to pay back and avoid the risk of default.
Ndii, in an interview on Monday night, said Kenya's debt is actually repayable.
"Let me tell you what would happen if we started restructuring debt now, you go where Zambia is, or where Ghana is. We are going to spend the next 3-4 years in very protracted debt restructuring negotiations. And we would do absolutely nothing else. We would not deliver on anything else. It’s a very bad idea," Ndii said.
Ndii then explained the difference between insolvency and illiquidity.
He said the need for restructuring comes about when the country is insolvent.
" You restructure your debt when you are insolvent. That means you couldn't pay. We are not insolvent. Our debt is actually payable. We can finance that payment. It's actually a significant sacrifice but we are actually able to pay," he said.
He said liquidity comes in when one is in need of cash today but can only gain access to it at a later time.
"The government has no credit constraints. It is able to finance itself, that is why it uses treasury bills and bonds, " Ndii said.
This comes amid salary delays for civil servants for the month of March.
Government officials came out to explain that the delays came about because a lot of money is being used to finance debts the country has.