The government of Kenya is planning to develop a financing plan for Kenya Airways (KQ) that will end the use of taxpayer money to support the operations of the loss-making airline by December 2023.
The National Treasury has announced this plan in a draft 2023 Budget Policy Statement but has not provided any details.
The plan, if implemented, could save taxpayers billions of shillings that are spent annually to keep the national carrier afloat.
During the Washington US-Africa summit, Dr Ruto had a mission to look for a strategic partner for Kenya Airways (KQ) to buy a controlling stake in order to stop the subsidization of the airline and to set it on a growth path.
The government has allocated KES 36.6 billion in the current financial year for the re-organization of the airline as part of its strategic investments in public enterprises.
This allocation brings the total amount of money injected into the national carrier to KES 63.2 billion, with an additional KES 35 billion in loans given to the airline between 2016 and 2020, bringing the total loans to about KES 98.2 billion.
In December 2022, KQ received a government bailout of KES 34.9 billion to help the airline repay debts, including those to aircraft lessors.
Additionally, the International Monetary Fund (IMF), which had entered into a 38-month program with Kenya to help it deal with its debt vulnerabilities, had pushed for the restructuring of KQ as one of the program’s conditions.
As of November 17, 2022, KQ’s debt amounted to $835 million, which included all debts, loans, letters of credit facilities, and convertible equity amounts, of which $688 million was guaranteed by the Government of Kenya.