By Jakowiti Atwech
Treasury will from Thursday start repayment of the principal loan extended to Kenya for the first phase of the Standard Gauge Railway (SGR) project after the expiry five-year grace period that China had extended to Kenya for the loans used to build the railway line which ended on Tuesday.
In May 2014 Kenya signed a deal to borrow $3.233 billion (Sh324.01 billion) from China’s Exim Bank, comprising $1.633 billion commercial loan and $1.6 billion concessional to build the 385km modern railway between Mombasa and Nairobi.
Details from Treasury tabled in Parliament indicate that loan payments to Exim Bank of China will increase to Sh84.3 billion for the 2020/2021 and Sh111.4 billion in the 2021-22 financial years.
This will add to the growing load on Kenyan taxpayers for costs related to the multi-billion shilling SGR line, given that the Treasury has been servicing interest charges on the Chinese debt.
Loan repayments to China’s Exim Bank will jump from the Sh31 billion paid in the year to June to Sh71.4 billion in the current fiscal period, reflecting a 130 percent increase.
Acting Treasury Cabinet Secretary Ukur Yattani on Wednesday confirmed that the government has made arrangements for the transfer of Sh10 billion to China’s Exim Bank.
- “We have commenced the process of payment and money will hit their bank account by first week of January. This money has been captured in our budget,” Mr Yattani said