US issues Kenya a default notice for Sh57 billion Kenya Airways debt

A US-backed financier has slapped the Treasury with a default notice for delayed payment of a Sh57.8 billion loan that the government guaranteed Kenya Airways.

Chris Kiptoo, the Treasury Principal Secretary, told Parliament that the Exim Bank of the USA has handed in a default notice after Kenya failed to remain up to date with payments of the loan.

This highlights the country’s struggles with the mounting public debt, whose cost servicing is expected to be more than half of projected State revenues in the fiscal year ending June.

KQ defaulted on part of its $525 million (Sh64.6 billion) loan from the Private Export Funding Corporation (PEFCO) of the USA and guaranteed by Exim Bank of USA which, in turn, was guaranteed by the Government of Kenya.

The 89-year-old Exim Bank, which is fully owned by the US government, provides direct loans, commercial loan guarantees, export credit insurance and working capital guarantees for American exporters.

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