Kenya is set to repay various principal loans and interests to countries and international financial institutions from July 2024.
According to a report by the National Assembly's Public Debt & Privatization Committee, most debt repayments will be made for China loans.
The report detailed that the government will repay Ksh147 billion to the Export-Import Bank of China.
Notably, the Exim Bank of China was crucial in funding the Standard Guage Railway (SGR) project from Mombasa to Nairobi.
China Loan Repayment in Context
- Ksh147 billion expenditure on a budget is a large amount of money. This can fund a major project such as the Nairobi Expressway whose project value is estimated at Ksh80 billion.
- The collection of such an amount of money is also monumental. For instance, the government aims to collect an average of Ksh50 billion from the 2.5 per cent motor vehicle tax in one year.
- Therefore, if the government were to principally use money collected from the motor vehicle tax to pay the loan, it would take close to three years.
"A review of the creditor composition indicates that the Exim Bank of China is a key driver of debt servicing expenditures. The creditor, alone, accounts for 25 per cent (Ksh147 billion) of total external debt servicing expenditures.
"This is followed by numerous commercial loans which together account for 35 per cent of total external debt servicing expenditures," read the report in part.
Other Major Loan Repayments
Other loan repayments that are set to be undertaken in the upcoming financial year include Ksh83.8 billion for the World Bank.
Likewise, the government will pay Ksh14.7 billion to the Internal Monetary Fund (IMF).
Other payments are due to the Exim Bank of the United States of America at Ksh20.9 billion and Ksh14.8 billion for the government of France.
Meanwhile, the current debt portfolio for the country stands at Ksh10 trillion, with domestic debt taking the largest proportion.
"Public debt stock amounted to Ksh10.54 trillion as of April 2024 and comprised External Debt and Domestic debt amounting to Ksh5.2 trillion and Ksh5.3 trillion, respectively.
"This follows a decline of Ksh598 billion from Ksh11.4 trillion due to the appreciation of the Kenyan shilling against the USD and the Euro which together, account for up to 88 per cent of the denomination of the debt stock," read the report in part.
