China Exim Bank five year repayment holiday for the $1.4 billion loan used to build the Nairobi-Naivasha SGR expires on Thursday, 21st January 2021. This means that unless officials from both countries come up with a last-minute deal to restructure either the loan or China’s broader debt portfolio in Kenya, the National Treasury will be forced to find ways of paying the loan.
Kenya currently pays $1 million every month to China’s Africa Star Railway Operation Company to run the Nairobi – Mombasa SGR.
Since 2017, Kenya has failed to meet its monthly repayments, and in September last year, the National Assembly Parliament voiced concerns, wanting the monthly cost to be brought down to $600,000.
As per the agreements made with China Exim Bank in May 2014, Kenya has fifteen years to repay the SGR loan.
In the current financial year, repayments are set to increase to KSh84.3 billion, then later KSh111.4 billion in the financial year 2021/2022.
With about $6.4 billion of outstanding loans, China is by far Kenya’s largest bilateral creditor but still accounts for less than 10% of its current $76 billion external debt.
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