Kenya is next week expected to make the first of 30 semi-annual instalments to repay a US$1.4billion (Sh163bn) loan it took from China five years ago to build the Nairobi-Naivasha standard gauge railway line as it faces its worst crush crunch in years.
Disclosures published by the National Treasury on Kenya’s external debt register as of 2018 indicate that the SGR loan’s first installment is due on 21 January 2021.
The principal repayments would come to Sh5.4billion before interest is added.
The loan was taken with an interest rate of 3% above the prevailing London Inter-Bank Offered Rate (Libor+3). Libor is the benchmark interest rate at which global banks lend to one another short-term funds.
Over the last six months, Libor has hovered between 0.13% and 0.25%, meaning Kenya will likely start paying China’s Exim Bank at the rate of 3.13% or thereabouts.
Kenya which has just received a six-month reprieve on its due debt to the Paris Club of sovereign donors is actively negotiating with China to reschedule its debt payments, Treasury Secretary Ukur Yattani said.
Besides the Sh140bn loan for Naivasha SGR, repayments on the Mombasa-Nairobi SGR loan of US$160bn (Sh176bn) kick in on July 21 this year. It is also to be made in semi-annual instalments.
There is also a 50m yuan (Sh850m) loan for economic-technical cooperation taken in 2011 that is due for first repayment on 1 April 2021.
Another 660m yuan (Sh11bn) Chinese loan was taken out in 2014 for upgrading the Nairobi electricity network and is also due for the first repayment in September 2021.
The government is also negotiating with other bilateral and multilateral donors even as it faces stringent conditions imposed by the International Monetary Fund as a condition for getting debt relief.
A raft of World Bank loans are also due for repayment this year. These include a Sh30bn loan taken out in 2011 for construction of the northern transport corridor roads, the rehabilitation of the fire-damaged Jomo Kenyatta International Airport, and improvement of airports’ security. The first payment is due in August 2021.
Another Sh10bn World Bank loan taken out in 2011 for the improvement of slums is due for initial repayment in May 2021.
Among the other such loans Kenya is supposed to start paying this year (2021) include:
A Japanese Yen 27bn (Sh28bn) Japanese government loan for the Mombasa Port Area Road project is due for repayment beginning 20 July 2021 in semi-annual instalments.
A Euros 3 million (Sh398m) loan from Germany taken out in 2011 for irrigation projects for small-holder farmers. First payment due on 30 December 2021.
A Euros 10m (Sh1.3bn) Spanish loan for digital terrestrial television migration projects that is due on 21 May 2021.
A Euros 5.7m (Sh664m) Spanish loan for Fish quality-control laboratories.
A Euros 7.6m (Sh1bn) Belgian loan for the Nanyuki-Isiolo-Meru electricity line due for initial repayment on 31 December 2021.
A Euros 5.1m (Sh677m) Austrian loan for firefighting equipment that kicks in on 30 June 2021.
A Euros 11m (Sh1.46bn) loan from the French Agency for Development (AFD) for a northern-Kenya wildlife conservation project whose repayment commences this month on 31 January 2021.
Euros 91m (Sh12bn) from the French Agency for Development is also due for repayment starting 31 January 2021. The loan was for the Ethiopia-Kenya electricity transmission line project.
However, the nation’s exchequer still faces daunting commercial debt that it took alongside concessionary loans and which it has to pay to avoid blacklisting by lenders.
“(There) is no intention to seek debt relief from commercial creditors. That would harm our credit rating” a senior Treasury official told GBR.
Source: The Government Business Review