Economy

China ready to give Kenya debt service break

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Treasury building. FILE PHOTO | NMG

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Summary

  • China has said it is holding talks with Kenya for a possible debt service suspension to help the country recover from the economic knocks of Covid-19.
  • Kenya which received a Sh32.9 billion loan repayment break from Paris Club of countries said it is eyeing an additional Sh40.6 billion debt waiver from non-G20 countries to use revenues for tackling the coronavirus pandemic.

China has said it is holding talks with Kenya for a possible debt service suspension to help the country recover from the economic knocks of Covid-19.

Kenya which received a Sh32.9 billion loan repayment break from Paris Club of countries said it is eyeing an additional Sh40.6 billion debt waiver from non-G20 countries to use revenues for tackling the coronavirus pandemic.

“China attaches great importance to debt suspension and alleviation in African countries including Kenya and is committed to fully implementing the G20 Debt Service Suspension Initiative (DSSI),” the Chinese Embassy in Nairobi said.

“We stand ready to strengthen coordination with Kenya and assist Kenya in its efforts to address debt challenges. Both sides are now keeping efficient communication through smooth channel.”

The country’s biggest bilateral lender is China which Kenya is expected to pay Sh109.4 billion this year including maturities of the second phase of the Standard Gauge Railway to Naivasha.

China says it has signed debt service suspension agreements with 12 African countries and provided waivers of matured interest-free loan for 15 African countries under the G20 framework.

The China International Development Cooperation Agency and the Export-Import Bank of China have implemented all eligible debt suspension requests of the developing nations.

The coronavirus pandemic has pushed Kenya into a crisis as the country faced huge debt repayments while tax revenues plunged.

Kenya is struggling with elevated debt payments which has spiralled to Sh7.1 trillion or 69.2 percent of the economy at a time when revenues have fallen as a result of the Coronavirus pandemic.