The Treasury dismissed an official statement indicating that Chinese lenders fined Kenya Sh1.312 billion for delayed payments of loans provided to build the Standard Gauge Railway (SGR).
Treasury Secretary Ukur Yatani maintained that Kenya has not defaulted on its public debt, describing the reports as “erroneous and alarming”.
He maintained that the country has not defaulted on its debt service obligations to the People’s Republic of China on account of the SGR loan.
“At no time has Kenya been flagged as a country defaulting on its external debt obligations,” Yatani said
“We wish to state categorically that Kenya has never defaulted on the settlement of its debt service obligations to any of its creditors, nor has any creditor filed or reported any claim of default on debt service payments on facilities extended to the government of Kenya,” the CS reiterated
According to Yatani, there has been no reason for Beijing to sanction Nairobi over debt repayment issues given that Kenya is yet to accumulate any debt arrears in decades to suggest difficulties in debt servicing.
He said all public debt, including the SGR loans, are paid from the Consolidated Fund and indicated that debt service is always the first charge on the account and takes precedence over other forms of expenditure.
According to reports, the Export Import Bank of China and other lenders fined Kenya Sh1.312 billion mounting debt burden to President William Ruto’s government following President William Ruto’s directive to return port operations back to Mombasa as revenues generated from the passenger and cargo services on the track are expected to dip further.
This reversed one of the most controversial policies of the Jubilee administration which was to ensure that the SGR has minimum guaranteed business to repay the Sh450 billion ($3.7 billion) debt taken to build it.