Kenya has resumed repaying of debts owed to China after the latter’s six-month debt-repayment suspension from January this year expired in June, which helped Kenya temporarily retain KSh27 billion that was due for six months ending June 30.
A first batch marked the government’s resumption for 2021-22 remittances to the Export-Import Bank of China (EXIM), amounting to KSh82.7 billion.
China, which accounts for about one-third of Kenya’s 2021-22 external debt service costs, is the country’s biggest foreign creditor after the World Bank. According to budget documents, Kenya plans to spend KSh117.7 billion on Chinese debt in the period, of which about KSh24.7 billion is in interest payments and almost KSh93 billion in redemptions.
Kenya’s debt-servicing costs are poised to surge 35% to KSh1.17 trillion in the year through June 2022, which even exceeds the KSh669 billion budget for development projects during the period.
In July this year, China froze the disbursements of loans to Kenya, citing discomfort over the latter’s request to extend the debt repayment holiday to December from an earlier deadline of June. As a consequence, Chinese-funded projects faced a cash crunch, with contractors reporting delayed payments from banks like Exim Bank.
The country is one of Kenya’s biggest foreign creditors, having lent KSh758 billion as of April 2021 to build rail lines, roads and other infrastructure projects in the past decade.
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