What fine? Treasury responds to reports Kenya defaulted on China loan

Kenya owes about Sh600 billion for the construction of the Standard Gauge Railway.

NAIROBI, NAIROBI COUNTY, KENYA - 2020/06/11: Kenyas National Treasury and Planning Cabinet Secretary, Ukur Yatani with the budget briefcase before leaving to Parliament for budget reading 2020/2021. (Photo by Billy Mutai/SOPA Images/LightRocket via Getty Images)

Treasury CS Ukur Yatani has responded to reports that Kenya defaulted on the loan owed to Chinese banks.

Kenya owes about Sh600 billion for the construction of the Standard Gauge Railway.

In a statement on Thursday, October 13, 2022, CS Yatani refuted the claims, saying the government was up to date with all debt obligations.

"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.

Furthermore, Kenya has not accumulated any debt arrears in decades to suggest difficulties in debt servicing,” the statement read.

He said Kenya undergoes regular evaluation by many independent rating institutions that give the country’s debt servicing a clean bill of health.

The Cabinet Secretary also explained that the government undertakes to pay debts first before allocating money to any other projects or commitments.

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 the first charge on the Consolidated Fund and takes precedence over other forms of expenditure,” CS Yatani.

He assured Kenya’s financial partners; creditors, development partners and investors, that the country’s financial position is sound and robust.

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