Chinese President Xi Jinping meets with President William Ruto at the Great Hall of the People in Beijing, capital of China on October 18, 2023. PHOTO | AFP
The recent visit by a Kenyan delegation led by President William Ruto to China was not motivated by a quest for new loans, according to the Treasury, despite previous indications that the country would seek to unlock new funding for road projects.
Treasury Principal Secretary Chris Kiptoo told the Business Daily that the three-day trip was connected to Kenya’s participation in the Belt & Road Initiative Forum.
“The purpose of the visit by the Kenya delegation to China was to attend the BRI forum and not to ask for funds,” he said.
Earlier this month, Deputy President Rigathi Gachagua indicated that the President’s visit to China would involve requesting Sh150 billion ($1 billion) to complete stalled roads and an additional request for the review of loan terms.
“In those negotiations, the President will ask the Chinese government to review credit service terms for the existing loans and also give us a top-up so we can complete stalled road projects,” Mr Gachagua had indicated.
Kenya, nevertheless, has a chance to tap new financing from China for infrastructure development with Beijing announcing the injection of an additional Sh14.9 trillion ($100 billion) into its Belt and Road Initiative.
“Kenya welcomes the offer for infrastructure financing support for the Belt and Road Initiative and will seek to access the financing package. The amount of new project financing will depend on project priorities, fiscal space for new borrowing and debt sustainability thresholds,” Dr Kiptoo said.
Dr Ruto and his Chinese counterpart Xi Jinping met on the sidelines of the forum where discussions on new infrastructure deals were to be ironed out.
Treasury officials, including the Cabinet Secretary and Principal Secretary, met with senior officials from the China Development Bank, China International Development Cooperation Agency and the China Export-Import Bank where the three entities affirmed plans to support Kenya’s economic development.
Earlier during the visit, the President made a pitch for partnerships between Kenya and the Chinese private firms in a move to set the pace for new public-private partnerships, especially in the sectors of energy and ICT.
The President, for instance, signed memoranda of understanding with two Chinese firms: China Energy International Group and Huawei with the deals entailing the modernisation of power generation and the development of ICT infrastructure respectively.
The exchequer has indicated any new borrowing plans should be expected to take into consideration the fiscal deficit of Sh718.9 billion approved by Parliament in June.
Net foreign financing was approved at Sh131.5 billion, the bulk of which is expected to be sourced in concessional terms from multilateral lenders.
“As you are aware, we are pursuing a fiscal consolidation plan, so any borrowing we will make this fiscal year will be as per the fiscal deficit approved by Parliament. The external financing part of this will be from multilateral institutions, bilateral lenders and development finance institutions,” Dr Kiptoo said.
Despite slowing down on new loan issuances, China is still Kenya’s largest bilateral lender with the bulk of credit facilities relating to support for the construction of the standard gauge railway (SGR).
According to data from the exchequer, Kenya owed China Sh856.3 billion as at the end of April this year, a Sh21.7 billion increase in the debt stock from Sh834.6 billion at the end of March.
Data from the latest external public debt register shows the bulk of Kenya’s debt to the Chinese is owed to the Exim Bank of China with the amount outstanding at the end of June last year standing at Sh809.1 billion.
Other major projects funded by Chinese credit outside the SGR include the e-government project, the Olkaria IV geothermal production wells drilling and the construction of the Kenyatta University Teaching Research and Referral Hospital.
