The latest quarterly Economic and Budgetary Review report for the half-year period ended December 2019 by Treasury PS Kamau Thugge revealed that China scooped the lion’s share of Kenya’s debt repayment.
Debt repayments to China are recorded to have more than doubled from Ksh6.3 billion paid in the July-December 2016 period, to the Ksh15.43 billion spent on servicing loans from China during a similar period in 2018.
The Ksh15.43 billion spent on servicing loans from China in the July-December 2018 period, represented 22.05 percent of the Ksh69.45 billion spend on total foreign debt.
“We note that between FY2005/06 and FY2012/13, debt accumulation averaged Ksh109.4 billion per fiscal year but has since surged to an average of Sh509.6 billion per fiscal year between FY2013/14 andFY2017/18,” stated a Genghis Capital financial report.
In the total amount paid to China (Kenya’s biggest lender), Ksh12.80 billion represented interest and Ksh2.63 billion principal sum.
The huge strain of the debt repayment structure was further exemplified in Treasury CS, Henry Rotich’s budget, where nearly Ksh870.62 billion is set to be paid to creditors for the financial year ending June 2019.
This would represent more than half of the revised Ksh1.61 trillion in projected tax receipts.
In addition, the report revealed that Kenya’s debt repayment to India spiked by 719 percent to Ksh368 million in the six months through to December 2018 compared to the previous year.
Razia Khan (a London-based Standard Chartered Bank chief economist for Africa) in her latest notes regarding Kenya stated the impending elevation of debt service repayment following the end of most grace periods granted by lenders.
“Kenya will face elevated debt service obligations in 2019, as the initial five-year grace period extended by the Export-Import Bank of China for the standard gauge railway ends in May,” she observed.
China’s grip on Kenya took a firm hold back in 2009 when they financed the construction of the Thika Superhighway, during President Mwai Kibaki’s tenure.
