China Grants Kenya 6 Month Debt Relief of Kes 27 Billion
China has postponed Kenyan debt repayments worth Kes 27 billion that was due over the next six months. Kenya’s Cabinet Secretary for Treasury Ukur Yatani said “we are happy to announce that our engagement with China where we hold about about Kes 27 billion that was due between January and June, we are now not going to pay immediately but we are going to pay in the future.”
This comes a week after the Paris Club of creditors offered the East African nation a similar relief. Ukur Yatani also added that the debt relief will give the country an opportunity and a break on the kind of liquidity that we desire.
Kenya was due to start repayments from Thursday on one of the loans from the export-import bank of China that was used to fund the building of a standard gauge railway, according to a Treasury report.
The loan was to be repaid in 30 instalments from January 21 to July 21, 2035, at a price of Libor plus 3%.
‘Kenya won’t seek debt suspension from multilateral and commercial creditors “to safeguard its sovereign rating and its future access to international financial markets,” Ukur Yatani said earlier this month.
Kenya has joined several other African countries seeking debt-repayment pauses as it struggles to deal with the economic downturn brought about by the coronavirus pandemic.
In October 2020, the government revised its 2020-21 budget-deficit forecast to 8.9% of gross domestic product, from an earlier estimate of 7.5%.
Kenya’s total debt jumped to 65.6% of gross domestic product in June 2020 from 62.4% a year earlier, the World Bank said in November.