China fines Kenya $10 million for defaulting on SGR loans
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By Gerro Biko GAROWE ONLINE
- Posted On 14-10-2022, 07:23AM
NAIROBI, Kenya - The Chinese government has fined Kenya $ 10 million for defaulting on repayment of the Standard Gauge Railway (SGR).
This comes at a time when Ruto’s administration is struggling with mounting public debt.
The Chinese banks fined Kenya $10.8 million in the year ended June for loan defaults, according to Treasury documents seen by local media.
Kenya had borrowed over half a trillion shillings from Chinese lenders, led by the Export-Import Bank of China, to fund the construction of the SGR from Mombasa to Naivasha.
“This $10.8 million penalty relates to the cost of default on interest at one percent of the due amount,” reads documents seen by the media.
Taxpayers have been forced to shoulder the burden of the SGR loans because revenues generated from the passenger and cargo services on the track are not enough to meet the operation costs, which stood at $152.8 million in the year to June against sales of $123.9 million.
SGR posted an operating loss of $28 million, and wired $187.6 million) in loan repayments in the year to June.
Earlier on Kenya had asked for an extension of the debt repayment moratorium from bilateral lenders, including China, by another six months to December 2021.
Chinese banks led by the Exim Bank of China opposed Kenya’s request for a debt repayment holiday in a standoff that delayed disbursements to projects funded by Chinese loans.
This forced the former regime to drop its push for an extension of the debt repayment holiday to avoid straining relations with Kenya’s biggest bilateral creditor.
However the outgoing Cabinet Secretary for National Treasury and Planning, Ukur Yattani refuted the claim and said the country has not defaulted on its repayment of the loan.
He further claimed that Kenya has good relations with every lender including China and every one of them will be treated equally.
GAROWE ONLINE
