China open to suspending Kenya’s debt repayment, Embassy says

President Uhuru Kenyatta
President Uhuru Kenyatta. [Photo: courtesy]

The Kenyan government has engaged the Chinese government to suspend the repayment of debts owed to the Exim Bank of China.

This, the government explained to China, is in a bid to relieve the economy of the pressure it has been under since the COVID-19 pandemic hit the country since March 2020.

A statement from the Chinese Embassy stated that both parties have been in communication over the issue.

China said that Kenya’s proposition is tenable.

“Both sides are now keeping efficient communication through a smooth channel,” the Embassy Spokesperson Huang Xueqing said in a statement.

Xueqing stated that the talks are part of efforts to strengthen ties between China and Kenya.

“We stand ready to strengthen coordination with Kenya and assist Kenya in its efforts to address debt challenges.” She said.

According to the Chinese Embassy, the Asian country which is emerging as the world’s largest growing economy will remain committed to fully implementing the G20 Debt Service Suspension Initiative (DSSI) for African countries.

The Chinese Embassy spokesperson maintained that “Africa’s need is always China’s concern.”

China has already suspended debt payment for 12 African countries and waived interest for matured loans for 15 other countries in the continent.

Xueqing said China has suspended debt payment more than any other G20 member state.

Kenya owes Beijing at least Ksh3.2 trillion. Most of this money was channeled to mega infrastructural projects such as the Standard Gauge Railway (SGR).

The SGR has two Phases: Mombasa to Nairobi and Nairobi to Naivasha.

A week ago, the Paris Club of creditors approved Kenya’s request to grant it a six-month tax holiday.

“The Paris Club creditors have accepted to provide to the Republic of Kenya a time-bound suspension of debt service due from 1st January to 30th June 2021,” the G20 group of rich nations said in a statement.

In the next six months, Kenya will save Ksh32.9 billion which it would otherwise spend paying off debts.

More than half of Kenya’s revenues got to paying debts and leaves little for development.