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In an about-face, Kenya’s new government signals intent to renegotiate Chinese loans
- Kenya’s new president, William Ruto, had said during his campaign that he would not go ‘anywhere near restructuring debt’
- But his transport secretary nominee says that current repayment terms are not favourable and the country is ‘choked by loans’
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Kenya’s new administration has signalled that it plans to renegotiate Chinese loans for the debt the country took on to build a major railway and seeks to extend the repayment period to up to 50 years.
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If so, this would be a reversal from a stance that Kenya’s new president, William Ruto, took during his campaign this summer, saying the country had the capacity to handle its debt situation and that his administration would not go “anywhere near restructuring debt”.
Still, on Wednesday during his confirmation hearing, Transport Secretary-designate Kipchumba Murkomen told lawmakers that while Kenya, which is staring at a debt crisis, had not defaulted on its loans, the current repayment terms were not favourable and the country was “choked by loans”.
Kenya is at high risk of debt distress and cutting the debt burden is part of a 38-month programme supported by the International Monetary Fund. The situation has been worsened by the effects of the coronavirus pandemic and the depreciation of the Kenya shilling.
Murkomen said Kenya would seek an extension of the repayment period especially for the loans to build the Standard Gauge Railway, which runs from the coastal port city of Mombasa to the capital Nairobi with an addition to Naivasha, a town in the Central Rift Valley.
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Kenya opens massive US$1.5 billion railway project funded and built by China
Kenya opens massive US$1.5 billion railway project funded and built by China
The project was financed and built by China as part of its Belt and Road Initiative and is operated by the state-owned China Road and Bridge Corporation.
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