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World Bank loans up but China on decline

SGR passenger train
Kenya's SGR passenger train. FILE PHOTO | NMG 

Outstanding public debt from the World Bank sharply increased by Sh60 billion in the three months to last September keeping the multilateral body the top creditor just as Chinese debt declined.

Fresh data from National Treasury shows World Bank’s concessional lending arm International Development Association’s (IDA) loans to Kenya stood at Sh570.28 billion as of September 30, up from Sh510.44 billion three months earlier.

Loans from China on the other hand stood at Sh558.46 billion at the end of last September compared with Sh562.11 billion last June – showing a decline of Sh3.7 billion.

Before last March, Chinese debt to Kenya had been on the rise and had even surpassed that from the Bretton Woods institution.

“The reduction of debt from China and an increase in debt from the WB I suppose could be a result of partial repayment of Chinese debt and an advancement of new loans by the WB.

A shift in focus would have meant that China’s debt would be near or around the same level as the previous quarter while that of the WB or other financing partners would have increased,” said Reynaldo Desouza, an analyst with Sterling Capital, an investment bank.

Longer time

He noted that IDA loans could have increased because it is concessional with less than one per cent interest rate, 30- to 40-year tenor and a 10-year grace period.

Mr Desouza, however, said the increase in World Bank loans and the decline in Chinese ones could not be currently termed as a trend, for a longer time was needed to draw a conclusion.

“I think it is too soon to make a valid conclusion on the shift in funding partners based on the data provided in the quarterly economic and budgetary review.

This can only be seen clearly if we look at the numbers over time. So in my view there isn’t any significant shift in preference of funding partners,” said Mr Desouza.

The increasingly controversial Chinese debt overtook the WB debt for the first time at the end of December 2017. It has mostly gone into infrastructure development.

Much of the debt has gone into the construction of the Standard Gauge Railway and other infrastructure projects.

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