Debt & Democracy
Debt and Democracy
What happens to democracy, when debt repayments dictate government spending? How is sovereignty affected when policy choices prioritise creditors over citizens' human rights? What does it mean for the environment and people’s rights when creditor institutions dictate policies? Explore these linkages in the following videos.
Kenya
By Okoth Opondo
Kenya has struggled with high debt payments since 2018, when external debt service to government revenue surpassed the 15 per cent IMF debt sustainability threshold. By 2024, the country was devoting a quarter (24 per cent) of its government revenue to pay external creditors and projections indicate it will remain above 15 per cent until at least 2030.
While most of Kenya’s public debt is owed to external creditors, domestic debt places an additional burden on the government budget, with total debt payments representing 62.4 per cent of government revenue.
The consequences of rocketing debt repayments, and the austerity implemented to be able to meet them, has led to a 12 per cent reduction in public spending per person between 2018 and 2024, according to Debt Justice UK calculations.
To date, Kenya has neither defaulted nor requested a debt restructuring of its external debts. Instead, it has continued to borrow, including through expensive bond issuance and IMF programmes to meet debt payments.
In April 2021 the IMF approved a US$ 2.34 billion programme for Kenya, which aimed to support post-pandemic growth, and reduce debt vulnerabilities. This was topped-up in 2023 following a Resilience and Sustainability Facility (RSF) arrangement. Under these two IMF programmes, the Kenyan government attempted to increase fuel and housing levies in 2023, followed by a new Finance Bill in 2024. Both policies sparked mass protests led by young Kenyans, which forced the government to backtrack. However a severe crackdown by authorities led to the deaths of 60 protestors and hundreds of injuries.
As of March 2025, the Kenyan government is negotiating a new programme with the IMF, which has been criticised by Kenyan civil society as a recipe for deepening inequalities in the country.
The Nairobi Expressway illustrates how mega-infrastructure can deepen concerns about democratic accountability concerns. Built under a PPP contract by China Road and Bridge Corporation, the 27km highway cost US$ 670 million, 75 per cent of which was loans. Yet, the road is unaffordable for many ordinary Kenyans who are already facing a high cost of living. It has also been reported that the Expressway operator recorded a Sh1.84 billion net loss despite rising traffic, thereby shifting costs onto citizens while also limiting democratic scrutiny over who benefits from borrowing.
Argentina
By Aylén Tapia, Parlamento Mapuche Tehuelche
Argentina is in a debt crisis. In 2024, 18.9 per cent of government revenue was devoted to paying external creditors, far exceeding the International Monetary Fund’s (IMF) own debt sustainability threshold of 15 per cent. Moreover, when we add domestic debt to the mix, debt service mounts up to 63 percent of government revenue. While most of Argentina’s debt is owed to private creditors, mostly bondholders, and to bilateral creditors, predominantly China, the country’s debt history and present crisis has been significantly shaped by IMF programmes and their conditionalities.
Following IMF dictates, debt repayments have historically and continue to be prioritised over social protection and public services. The current far-right Milei government, with the IMF’s blessing, is undertaking a radical austerity and deregulation programme. As a result, the burden of these adjustments falls heavily on citizens who are directly affected by the cuts to public services, wages, pensions and social protection, particularly those most vulnerable and especially women and girls.
The debt crisis in Argentina is not just a social and human rights crisis, but also an environmental and democratic one. Following IMF advice, Argentina has relied on large-scale fossil-fuel extraction and exports to repay its debts. Vaca Muerta, an oil and gas extraction project located in Mapuche territory in Neuquén, is a key example of this dynamic. The shale fracking requires large amounts of water, generates toxic waste, increases pollution and affects indigenous people, local communities and ecosystems.
The history of IMF involvement in Argentina is a clear example of how the Washington-based institution and the debt burden combined can undermine a country's sovereignty, determining the way the country manages its natural resources, public budgets and policy choices.