Kenya has secured a debt repayment moratorium from China which will save it Sh27 billion in the period to June, its National Treasury Cabinet Secretary said on Wednesday.
The government won a debt repayments relief agreement with the Paris Club of international lenders last week, and is looking for deals with non-Paris Club bilateral creditors like China.
China is one of the country’s biggest foreign creditors, having lent it billions of dollars to build rail lines, roads and other infrastructure projects in the past decade.
Ukur Yatani, the Cabinet Secretary National Treasury, said the deal had already been clinched, although China said on Monday it stood ready to help Kenya with debt, without offering more details.
“We are now not going to pay immediately, but we are going to pay in the future,” Yatani said in an interview with privately-owned Spice FM radio station, referring to the figure of 27 billion shillings which was falling due.
The impact of the COVID-19 pandemic has battered Kenya’s tax revenue collection at a time when more of its debts are falling due and as it is still grappling with gaping fiscal deficits.
China had signed debt service suspension agreements with 12 African countries and provided waivers of matured interest-free loan for 15 African countries under the G-20 debt service suspension initiative, its Nairobi embassy said on Monday.
Kenya’s total debt jumped to 65.6 per cent of gross domestic product in June 2020 from 62.4 per cent a year earlier, the World Bank said in November.