China has accepted Kenya’s request for a debt service suspension to help the country’s economy recover from the COVID-19 shock.
National Treasury Cabinet Secretary Ukur Yattani said China offered the country a break for the Sh27 billion that was due for payment between January and June this year.
“We are now going to pay in the future. This will give us the liquidity that we desire to be able to finance both the National and County Governments,” Yattani said in an interview on Wednesday.
The debt relief comes after talks between Kenyan and Chinese officials, with Kenya now required to service the debt at a later date.
Amid growing concerns over the country’s mounting debt, Yattani maintains that Kenya’s international record is still good.
“We are happy…the tax breaks depend on the confidence our partners have in our country. There are those who request tax relief but did not get it because they are considered extremely high risk and are likely to default. We are not defaulting,” Yattani stated.
He added that there is no cause for alarm as the national debt is currently at 60 percent of the country’s Gross Domestic Product (GDP).
“Most of the developed countries are in the range of 110 to 130 of the GDP,” he said.
Kenya owes China at least Sh3.2 trillion, making it the country’s largest bilateral creditor.
Kenya has used Chinese loans to fund key infrastructural projects including the Mombasa-Nairobi-Naivasha Standard Gauge Railway and the Westlands-Jomo Kenyatta International Airport (JKIA) Express Way, whose construction is underway.