The government on Monday, March 15 shared details of the loan advanced by the China EXIM bank that was used in the construction of the Standard Gauge Railway (SGR).
Treasury Cabinet Secretary Ukur Yatani who was responding to reports that China could possess Mombasa Port over unpaid debts said that neither China nor any other country can seize the port.
“For the avoidance of doubt, there is absolutely no risk of China or any other country taking over the Port of Mombasa,” Yatani said.
The CS further explained the loan terms that Kenya entered with China in the construction of the multi-billion SGR railway line and the purchase of modern trains.
According to Yatani, the government made three loan agreements with The Export-Import Bank of China (China EXIM) to provide financial service in the SGR project.
The said loans were then reviewed by the Attorney General for clarity purposes before the Treasury CS signed it on behalf of the government.
“The government of Kenya through the National Treasury is servicing the SGR loans in accordance with the provisions of the loans agreement and the Public Finance Management (PFM),” the statement read in part.
Section 50 (6) of the PFM says that any public debt incurred by the national government is a charge on the Consolidated Fund.
Following this provision, Yatani said that part of the loan that is due is part of the Consolidated Fund and cannot be paid back using other means without Parliament's approval.
“The government of Kenya cannot and has not pledged public assets as security for a debt, because such an action would not only violate provisions in its existing loan agreements with other bi-lateral creditors but more importantly because Kenya treats all its creditors equally,” the CS emphasised.
The CS added that the Port of Mombasa has no adverse exposure to any lender or category of lenders in which existing government loans are tied to it.
The government has in the past come under pressure to reveal details of the SGR project agreement with China.
In 2018, the Law Society of Kenya Nairobi Branch Chairman Charles Kanjama questioned how such a deal could have a secrecy clause yet it was set to benefit the public.
“The agreement is being made in Kenya, the railway is built in Kenya and the assets they are talking about are in Kenya, so why is it being governed by the laws of China?” Kanjama questioned.
