Treasury Responds to Reports of China Fining Kenya Sh1.3 Billion for SGR Loan Default

Treasury Cabinet Secretary Ukur Yatani has disputed reports that Kenya defaulted on payment of Chinese loans provided for the construction of the Standard Gauge Railway (SGR).

Citing Treasury documents, Business Daily reported on Thursday that Chinese lenders fined Kenya Sh1.312 billion ($10.8 million) for loan defaults in the financial year ended June.

But in a statement on Thursday, CS Yatani stated that Kenya has never defaulted on any loans borrowed from external creditors and foreign nations, terming the report as erroneous. 

"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," read the statement.

"As a country accessing international financial markets to raise resources, Kenya undergoes frequent independent sovereign rating reviews whose outcomes are published widely."

He further indicated that Kenya's credit rating remains stable, adding that Kenya has never been flagged as a country that can possibly default on its external debt obligations.

"It is also important to note, 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," he said.

"We want to assure our creditors, development partners, investors and the general public that Kenya's financial position is sound and robust."