Revealed! Kenya to seek $1 bn (Ksh140bn) loan from China
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Kenya to seek $1 bn (Ksh140bn) loan from China on a longer repayment period according to revelations by DP Gachagua
Kenya to seek $1 bn (Ksh140bn) loan from China on a longer repayment period according to revelations by DP Gachagua.
President William Ruto will ask China for a $1 billion loan to complete stalled road construction projects when he travels to Beijing later this month, Gachagua said on Friday.
Ruto’s plan, which also includes a request to lengthen the maturity periods of existing loans, marks a shift in his stance on Chinese debt after his coalition criticized his predecessor’s borrowing spree from China during last year’s election campaign.
The Chinese loans, which stand at more than $8 billion, were used by former President Uhuru Kenyatta’s government to construct infrastructure like roads, but many of these projects have since stalled after contractors leftover unpaid bills.
Deputy President Rigathi Gachagua said Ruto will try to negotiate with Chinese officials on new loan terms.
“Can we talk to see if you can add us time, so we can pay slowly, and add us a little money so we can finish road construction?” Deputy President Rigathi Gachagua said on the local Inooro FM radio station.
“If we get $1 billion we can be able to give these people (contractors) the money they are owed so they can return so even as we pay the debt, the roads are completed,” he said.
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Africa was a focus of President Xi Jinping’s ambitious Belt and Road Initiative, launched in 2013 to recreate the ancient Silk Road and extend China’s geopolitical and economic influence through a global infrastructure development push.
But the surge in Chinese loans to countries like Kenya, before a slowdown in Chinese lending in 2019, has angered critics and pushed up debt loads and the subsequent repayment burden.
The Kenyan government is spending roughly half of its revenue to repay debts that are falling due, official data shows, straining its finances. The situation has been compounded by foreign debt repayments, amid a steep weakening of the Kenyan currency.
The cabinet ordered all ministries to cut 10% of their budget on Tuesday, while the president’s office imposed some restrictions on foreign travel by government officials to rein in expenditure.
“It is true that many people have been traveling abroad, spending a lot of money, and that is why the president ordered that even ministers and governors can only travel with two people,” Gachagua said.
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