Nairobi — China has offered Kenya a debt break of Sh27 billion that was due for payment between January and June 2021.
National Treasury Cabinet Secretary Ukur Yattani said following talks with authorities in Beijing, Kenya will be required to pay the debt later.
“We are now going to pay in future. This will give us the liquidity that we desire to be able to finance both the National and County Governments,” he told Spice FM in a Wednesday morning interview.
With growing concerns on the country’s ballooning debt, Yattai siad Kenya’s international record is still good.
“We are happy… (the tax breaks) depends on the confidence our partners have in our country. There are those who request for tax relief but did not get because they are considered extremely high risk and are likely to default. We are not defaulting,” he said.
Yattani said the national debt is currently at 60 per cent of Kenya’s Gross Domestic Product, with the country’s economy set to rebound a 5 per cent growth in the second half of 2021, despite a slow start due to the effects of COVID-19 pandemic.
“Most of the development countries are at the range of 110 to 130 of the GDP,” he said.
The Chinese Embassy in Nairobi last week assured on the country’s willingness to strengthen coordination with Kenya in its efforts to address debt challenges.
“Africa’s need is always China’s concern,” the Embassy said, “We stand ready to strengthen coordination with Kenya and assist Kenya in its efforts to address debt challenges.”
China has already signed debt service suspension agreements with 12 African countries and provided waivers of matured interest-free loan for 15 African countries under the G20 framework.
Cumulatively, China has suspended more debt service than any other G20 member.
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 (DSSI),” the Embassy said.
Kenya has benefited from infrastructural development funded through loans from China, including the Thika Superhighway, the Mombasa-Nairobi-Naivasha Standard Gauge Railway and the ongoing construction of the Westlands-Jomo Kenyatta International Airport (JKIA) Express Way that is aimed at easing traffic congestion to the main airport.