Kenya’s debt to China more than doubles in a year

Kenya’s debts to China have increased by 135.15% over the past year thanks to Chinese-funded infrastructure projects in the African country. Expenditure data released this week by the Treasury shows the amount repaid to Chinese lenders jumped 135.15% from KES 31.25 billion (Kenyan shillings) for the financial year ending June 2021, reported Business Daily Africa.

Repayments to Chinese lenders accounted for 81.4% of the KES 90.26 billion the Treasury spent on servicing bilateral debt in the nine months to March, according to provisional data, according to the report. Kenya had sought to save most of the cash owed to China in the first half of the current fiscal year, but Beijing rejected its request to postpone debt obligations for six months until last December.

Chinese lenders, particularly the Exim Bank, were uncomfortable with Kenya’s request to extend the Covid-induced debt service suspension program by wealthy countries, leading to delays in disbursements to active projects financed by Chinese financiers largely in the power transmission subsector, according to the report. mentioned. China has sought to negotiate its debt relief agreements with poor countries separately from G20 countries – including France, Italy, Japan, Spain, the United States, Belgium, Germany and the Republic of Korea – but applied the same terms, according to the report. mentioned.

This allowed Beijing to reserve the right to decide which loans and their amount will be subject to the repayment moratorium. The terms of Beijing’s loan agreements with developing countries are generally secretive and require borrowing countries like Kenya to prioritize repayments from Chinese state-owned banks before other creditors, according to the report citing a dataset compiled by AidData , an American research laboratory at the College. of William and Mary.

The Kenyan administration has largely taken out loans from China since 2014 to build roads, bridges, power stations and the Standard Gauge Railway (SGR), the report says, adding that it started after the Kenya has become a lower-middle-income economy, locking in highly concessional loans from development lenders such as the World Bank Group. The International Monetary Fund (IMF) constantly warns African and other Third World countries that increasing debt to China is dangerous. He points out that Chinese creditors are creating some instability or vulnerabilities.

Recently, World Bank President David Malpass said China needs to improve its lending practices in the developing world, especially in terms of the transparency of the loans it makes. “China is now one of the biggest creditor countries in the world, especially in the developing world…in terms of the official credit that has been extended to the 75 low-income countries, China owes almost 60% of that credit,” he added. Malpass said. (ANI)

(This story has not been edited by the Devdiscourse team and is auto-generated from a syndicated feed.)