China bags Sh40 per Sh100 in Kenya’s external debts
China has been the biggest recipient of external debt payments from Kenya in the three months ending September 2024.
China has been the biggest recipient of external debt payments from Kenya in the three months ending September 2024, taking Sh40 out of every Sh100 that Kenya paid external creditors during the period.
Out of the Sh165.6 billion that the Treasury spent settling dues from July to September, Sh65.4 billion (39.5 per cent) went to China, Treasury documents show.
The government spent Sh44.5 billion paying principal debts owed to the country during the three months, while interest on the loans was Sh20.9 billion.
The world's second-largest economy, has financed major infrastructure projects in Kenya including the standard gauge railway. Kenya intensified its economic ties with China starting with the administration of the late Mwai Kibaki.
“By the end of September 2024, the total cumulative debt service payments to external creditors amounted to Sh165.6 billion. This comprised Sh93.3 billion (56.4 per cent) principal and Sh72.2 billion (43.6 per cent) interest,” Treasury notes in its July-September 2024 quarterly budget report.
China’s debt stock dropped from $5.69 billion in June to $5.39 billion in September amid sustained loan repayments and strengthening of the Kenya shilling.
“Compared to the same period in FY 2023/24, external public debt stock from bilateral sources and commercial banks recorded a decrease of US$ 287.3 million and US$ 500 million respectively in the period ending September, 2024," the report notes.
"However, external public debt stock from multilateral institutions and suppliers’ recorded an increase of US$ 2.95 billion and US$ 5.1 million respectively in the period under review."
Kenya’s total external debt was Sh5.188 trillion as at end of September 2024, which was 48.1 percent of the total public debt stock of Sh10.79 trillion.
The government spent a total of Sh88.2 billion paying bilateral debts during the July-September quarter, with principal payments accounting for Sh64.5 billion (73 per cent), while interest payments were Sh23.7 billion.
Only payments to the US (Sh9.3 billion), France (Sh4.8 billion) and Italy (Sh4.6 billion) came closer to what China was paid during the period.
“By the end of September 2024, the total cumulative debt service payments to external creditors comprised 53.3 per cent, 31.1 per cent and 15.6 per cent of the total payments to bilateral, commercial and multilateral creditors respectively,” the Treasury report notes.
The debt payments to China also surpassed total payments to multilateral lenders such as the World Bank, the African Development Bank and others, who were collectively paid Sh25.9 billion, and equally surpassed payments to commercial lenders.
