The National Treasury has refuted claims that it has defaulted on its external debt service obligations to the People’s Republic of China on account of the Standard Gauge Railway (SGR) loans.
This follows a publication of a story in a local daily on October 13 that the country has been fined Sh1.312 billion by Chinese banks in the year ended June for loan defaults.
“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,” said Treasury CS, Ukur Yatani.
Further, Yatani noted that Kenya has not accumulated any debt arrears in decades to suggest difficulties in debt servicing.
“As a country accessing international financial markets to raise resources, Kenya undergoes frequent independent sovereign rating reviews whose outcomes are published widely. At no time has Kenya been flagged as a country defaulting on its external debt obligations,” Yatani said.
Meanwhile, the Treasury highlighted that all public debt, including the SGR loans, are paid from the Consolidated Fund in accordance with the Public Finance Management Act, 2012.
Debt service is a first charge on the Consolidated Fund and takes precedence over other forms of expenditure.
“We want to assure our creditors, development partners, investors, and the general public that Kenya’s financial position is sound and robust,” said Yatani.
The Treasury called upon the local daily to restrain itself from misinformation, with the potential of harming the country’s reputation in the international financial markets.
Kenya tapped over half a trillion shillings from Chinese lenders, led by the Export-Import Bank of China, to fund the construction of the SGR from Mombasa to Naivasha.
