Kenya could get a $1 billion loan from the People’s Republic of China, which can be used to partly settle a Eurobond that is maturing next June, the governor of the central bank said on Wednesday.
The loan was first announced in October. Kenya’s President William Ruto asked China for a $1 billion loan, his deputy said. The Kenyan President also asked China for more time to repay the debts, Deputy President Rigathi Gachagua said in an interview with a local radio station Inooro FM.
According to a report by Reuters, Kamau Thugge, Governor of the Central Bank of Kenya, has confirmed that the country is likely to get a fresh $1 billion loan from China in this financial year.
He reportedly said, “The National Treasury is engaged with the Chinese government. The timing is yet to be ascertained. Were we to get it before June 2024, it could be used to address the maturity of the Eurobond.”
Kenya spends record $471m on China debt
Kenya spent record $471m for outstanding Chinese loans in three months through September, official data shows. The 106.41 percent jump in interest costs was due to an increase in the floating rate for Chinese loans.
Kenya, under the administration of former president Uhuru Kenyatta, took a lot of loans from China to build roads, bridges, power plants, and the SGR in order to create jobs and employment opportunities.
President William Ruto is struggling to pay loans amid the economic crisis. Kenya owed China $5.94 billion in September 2023.
Kamau Thugge also said that authorities were expecting $300 million from regional bank Trade and Development Bank in December.
Kenya economic crisis
Kenya has been experiencing high inflation amid the economic crisis. Kenya was ranked the ninth-most vulnerable to a debt crisis among 60 developing economies in a report by Bloomberg Economics.
The currency of Kenya, Shilling, has sunk to historic lows. It is going through one of its worst crises in recent years. The Kenyan shilling’s depreciation of almost 20 per cent against the dollar this year highlights the crisis.