Treasury plays down debt default fears despite new loans

The Treasury has played down fears by financial experts that the country risks losing its national assets to China over the ballooning public debt.

Speaking at a stakeholder’s forum on public debt management at Intercontinental Hotel, Director of Policy Risk Management at the National Treasury, Daniel Ndoho Monday said the government will not default on payment of the Sh5.04 trillion debt.

“Repayment of debt is the first charge on our resources.

It does not require appropriation even by Parliament. We would rather talk about debt affecting other things, but not a likely default,” said Mr Ndoho.

The statement comes at a time the Government is said to be planning to take a new Sh100 billion debt to service two other syndicated loans maturing next year.

Global ratings firm Moody’s Investor Service warned that the country risked losing key infrastructure such as Zambia, Sri Lanka and Tajikistan who have relinquished a power utility, a port and land respectively to China over defaulted debt.

Mr Ndolo maintained that the current debt “is manageable and has not violated the 50 per cent of the net value of the Gross Domestic Product (GDP) set under the Public Finance Management Framework by International Monetary Fund (IMF).”

Data from the National Treasury shows that Chinese debt stood at Sh554.88 billion or 73.4 percent of total bilateral debt of Sh756.28 billion at the end of September.

Kenya has the third biggest chunk of Chinese loans on the continent, with seven per cent after Angola (30 per cent), Ethiopia (10 per cent) of all Chinese investment on the continent made between 2000 and 2017 according to Moody’s.