Raila Asks Ruto To Postpone Paying Debts

Azimio la Umoja One Kenya coalition party leader Raila Odinga has called upon President William Ruto to postpone the paying of debts it owes to creditors and financial institutions.

Speaking at the ‘Transforming a Nation’ conference by the Konrad Adenauer Stiftung Foundation on Friday, November 10, the former Prime Minister lamented that Kenya is currently caught in a debt rut where it has resorted to borrowing more to repay debt.

He asked the National Treasury to convince the creditors to postpone the debt payments to future dates rather than continue to take economic risks to service the debts and prevent cases of more defaults.

"It makes no sense to us to borrow more to repay debt when debt is already too high. Our position is that the National Treasury ought to ask creditors to push off payments falling due to a future date rather than keep paying it," he urged.

Raila Odinga speaks at the ‘Transforming a Nation’ conference held by the Konrad Adenauer Stiftung Foundation in Nairobi on November 10, 2023. /AZIMIO TV

Raila went on to give the Head of State financial advice on how institutions and members of the public opt to postpone the due dates of their debts to gain the financial potential to service them.

According to the Orange Democratic Movement (ODM) leader, Kenya is not a bankrupt country and thus has no reason to default.

"This is what people do when they have a crunch in their finances but know they can pay later when their income is higher. Rescheduling debt is not at all the same as default.

"People default when they are bankrupt. Kenya is not bankrupt. Kenya should not default. By rescheduling debt payments falling due, the government can forego punitive taxes and create room for critical social and economic spending," he added.

Raila also wants the government’s key initiatives, including the Hustler Fund, to be reviewed by a forum comprised of the governments, both political parties, the business community and civil society.

He further advised President Ruto to slash its operating budget by at least Ksh500 billion in a bid to free up resources for more urgent mitigations aimed at reducing the cost of living.

“To release resources to achieve these objectives, the government must cut the budget by an estimated Ksh.500 billion. The current policies have hit low-income families particularly hard, these are the same low-income families that the administration promised to lift up,” he stated.

“These families spend more than 40% of their income on food, they deserve and require relief. In particular, we must cut fuel taxes and raise social welfare payments. At this time, we demand tax cuts, not increases; Kenyans need to see their taxes go down, not up. We believe the current taxation regime is not sustainable.”

During his State of the Nation Address on Thursday, November 9, President Ruto warned of tough times ahead as he revealed that his government was moving ever closer to servicing Kenya's pending debt including the Eurobond.

The Head of State announced that the country will be paying the first batch of the Eurobond loan worth Ksh500 billion in December.

"Next month in December we will be able to settle the first Kenya shillings; 300 million dollars or 500 billion Kshs instalment of the US dollars 2 billion Eurobond debt that falls due next year. I can now confirm with confidence that we will and we shall pay the debt that has become a source of much concern to citizens, markets and our partners," he stated.

"The new direction may not be easy but it is ethical, responsible, prudent, and most importantly necessary. We have had to make hard decisions and make painful choices because we owe the people of Kenya to do the right things and to confront facts as they are."