Kenya, China Agree to $245 Million Debt Deferral Deal

China and Kenya have agreed to a six-month debt repayment holiday worth $245 million. Treasury Secretary Ukur Yatani announced the deal during a radio interview on Wednesday when he said the deferral “will give us an opportunity and break on the kind of liquidity that we desire.”

Although Yatani did not provide details, he gave the broad outlines of the deal according to a report by Citizen TV:

  • Kenya will have the next six years to make payments on the suspended debt service costs including a one-year grace period after June 2021.
  • Proceeds from the savings are required to be channeled towards combatting the pandemic.
  • Kenya is further obligated to make public its entire stock of debt.

Chinese and Kenyan negotiators finalized the arrangement less than 24 hours before a critical deadline when a $1.4 billion loan from the China Exim Bank to build the Nairobi-to-Naivasha railway would have been due. “We were making every arrangement to pay by [Thursday], but two days ago after our engagement, we are happy to get feedback that we don’t need to pay now,” Yatani said.

The $245 million debt rescheduling deal with the Chinese follows a similar $300 million arrangement that was reached last week with Paris Club lenders. Kenya, however, will not seek similar suspensions from either multilateral or commercial lenders “to safeguard its sovereign rating and its future access to international financial markets,” according to the Finance Minister.

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The post Kenya, China Agree to $245 Million Debt Deferral Deal appeared first on The China Africa Project.



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