China to help Kenya deal with debt over virus pressure

"We stand ready to strengthen coordination with Kenya and assist Kenya."

In Summary

•Kenya is listed among countries likely to default on external loans in the next five years, risking strategic assets used as collaterals.

•A report by  IHS Markit titled ‘Investors fret over sovereign bankruptcies in coming years’ compiled by the Financial Times shows Kenya's probability of defaulting has grown to 35 per cent.

The Treasury Building.
TREASURY BUILDING: The Treasury Building.
Image: FILE:

China has suspended debt repayments to Kenya over Covid-19 pandemic pressure.

Kenya is among 12 African countries that has received the suspension according to a statement from the embassy.

15 other African countries have also received waivers of matured interest-free loan under the G20 framework.

The embassy said the China International Development Cooperation Agency and the Export-Import Bank of China have implemented all eligible debt suspension requests of the developing nations.

"China attaches great importance to debt suspension and alleviation in African countries including Kenya and is committed to fully implementing the G20 Debt Service Suspension Initiative ," the embassy noted.

" We stand ready to strengthen coordination with Kenya and assist Kenya in its efforts to address debt challenges. "

But the embassy did not say whether Kenya will get relief through the same initiative.

Kenya is listed among countries likely to default on external loans in the next five years, risking strategic assets used as collaterals.

A report by  IHS Markit titled ‘Investors fret over sovereign bankruptcies in coming years’ compiled by the Financial Times shows Kenya's probability of defaulting has grown to 35 per cent.

Argentina tops the list with a probability of 55 per cent, Angola 52 per cent, Pakistan 48 per cent, Iraq 45 per cent and Cameroon 42 per cent.

Kenya’s public debt has been on the rise in the past decade, with the International Debt Statistics 2021 by the World Bank showing that the country’s external debt has grown four folds in the past decade.

According to the report, the total external debt grew to $34.2 billion (Sh3.48 trillion) last year from $8.55 (Sh872.1 billion) in 2009, a huge chunk of it from Chinese lenders.