Treasury report: China tops list of Kenya’s debt payments to external creditors
China received more in debt payments than multilateral lenders, including the World Bank and the African Development Bank.
A report by the National Treasury has revealed that China was the leading recipient of Kenya’s external debt payments during the three months ending September 2024, receiving 40 per cent of all payments to external creditors.
During this period, Kenya paid a total of Sh165.6 billion to external creditors, with Sh65.4 billion (39.5 per cent) directed to China.
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Of this amount, the report notes that Sh44.5 billion went towards clearing the principal debt, while Sh20.9 billion was paid as interest.
China has played a significant role in funding Kenya’s major infrastructure projects, including the standard gauge railway, following strengthened economic ties between the two nations during the late former president Mwai Kibaki’s administration.
The Treasury’s July-September 2024 quarterly budget report highlighted the breakdown of external debt payments.
“By the end of September 2024, the total cumulative debt service payments to external creditors amounted to Sh165.6 billion. This comprised Sh93.3 billion (56.4 per cent) principal and Sh72.2 billion (43.6 per cent) interest,” the Treasury report indicated.
Meanwhile, Kenya’s debt stock owed to China decreased from $5.69 billion (Sh735 billion) in June to $5.39 billion (Sh696 billion) in September due to steady loan repayments and the strengthening of the Kenya shilling.
The report also noted changes in external debt from various sources.
“Compared to the same period in FY 2023/24, external public debt stock from bilateral sources and commercial banks recorded a decrease of $287.3 million (Sh37 billion) and $500 million (Sh64.6 billion) respectively in the period ending September 2024,” reads the report.
However, the Treasury observed an increase in debt stock from multilateral institutions and suppliers, which rose by $2.95 billion (Sh381 billion) and $5.1 million (Sh659 billion), respectively, during the same period.
By the end of September 2024, Kenya’s total external debt stood at Sh5.188 trillion, representing 48.1 per cent of the total public debt stock of Sh10.79 trillion. Out of Sh88.2 billion spent on bilateral debt repayments during the quarter, Sh64.5 billion (73 per cent) covered principal repayments, while Sh23.7 billion went towards interest payments.
China’s payments far exceeded those made to other bilateral creditors such as the United States (Sh9.3 billion), France (Sh4.8 billion), and Italy (Sh4.6 billion).
“By the end of September 2024, the total cumulative debt service payments to external creditors comprised 53.3 per cent, 31.1 per cent, and 15.6 per cent of the total payments to bilateral, commercial, and multilateral creditors respectively,” the Treasury report explained.
China also received more in debt payments than multilateral lenders, including the World Bank and the African Development Bank, which collectively received Sh25.9 billion during the quarter.
Payments to commercial lenders were similarly outpaced by China’s share of the repayments.
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