More debt as China fines Kenya 1.31Bn on defaulting of SGR Loan.
Sources privy to Business daily have indicated that Kenya will now owe more debt as china fines the country.
Chinese loans were provided to build the standard gauge railway (SGR), However, Kenya has defaulted to pay because of the current country’s struggles hence more debt.
According to treasury statistics, The Chinese banks fined Kenya Sh1.312 billion in June for loan defaults.
Kenya received over half a trillion shillings from the country china led by the Export-Import Bank of China, to facilitate for the construction of the SGR from Mombasa to Naivasha.
Treasury showed,”This (Sh1.312 billion) relates to the cost of default on interest at one percent of the due amount.”
This will be a stretch on taxpayers since the revenue generated from SGR ( passenger and cargo services) is not enough to meet the operation costs.
This comes after Kenya had asked for an extension of the debt repayment moratorium from bilateral lenders, including China, by another six months to December 2021.
However, Lenders such as Exim Bank of China, opposed Kenya’s application for a debt repayment extension.
This caused a delay in disbursements to projects funded by Chinese loans
As of now, China accounts for about one-third of Kenya’s 2021-22 external debt service costs.
Former President Uhuru Kenyatta largely took loans from China from 2014 to build roads, bridges, power plants and the SGR.
This was majorly pushed by Kenya becoming a lower-middle-income economy, locking her out of highly concessional loans from development lenders such as the World Bank.
Kenya’s debt increased four times to Sh8.58 trillion under the former president’s regime.
Treasury revealed that Kenya spent almost 57 percent of tax income in the past financial year on repaying loans.