Several projects funded by the Chinese government and agencies in Kenya are facing a cash crunch, as China withholds loans to the projects.
According to reports, the delays have been caused by Kenya’s move to seek a debt moratorium up to December, even as debt obligations for Kenya pile.
Among Kenya’s biggest lenders in China include the Exim Bank of China, which is reluctant to release funds for the projects for fear of delayed or default in payments. Also, China Development Bank plays a vital role in funding Kenyan projects.
“Payment to contractors working on Chinese projects and paid under direct method have delayed since last month. We are told Chinese banks are not settling invoice because of the moratorium,” said a CEO of a State corporation quoted by Business Daily.
The Chinese Embassy in Kenya says that the issue is being addressed.
“To my knowledge, the relevant parties of the two sides are in close communication on specific issues under the DSSI framework. They are in communication with each other on this matter also under the framework of DSSI (Debt Service Suspension Initiative.,” said Huang Xueqing, the Chief of Information and Public Affairs at the embassy.
The government has however denied reports that China is withholding the loans, according to reports by the paper which spoke to Treasury CS Ukur Yatani and Director of the Public Debt Management Office Haron Sirma.
As of April 2021, Kenya had borrowed at least Ksh758 billion from China and its lenders, making China one of the biggest foreign lenders to Kenya.
Exim Bank financed the construction of Standard Gauge Railway (SGR), with Kenya said to be seeking a grace period for the repayment of the loan.
Kenya also got a moratorium for loans worth over Ksh32 billion from G20 countries, including Belgium, Canada, Denmark, France Germany, Italy, Japan, Republic of Korea, Spain and the USA.