China, Kenya agree repayment holiday on US$245 million worth of debt

Deal was struck just hours before Nairobi was due to make its first repayment on a US$1.48 billion loan from the Export-Import Bank of China

East African nation became mired in debt after its tax revenue slumped because of the coronavirus pandemic

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Kenya’s deal with China came just hours before it was due to make its first repayment on a US$1.48 billion loan used to build a railway line. Photo: Xinhua

Published: 6:00pm, 23 Jan 2021Updated: 6:00pm, 23 Jan 2021

China has approved Kenya’s request for a payment holiday on US$245 million worth of debt that was due between January and June, giving the East African nation breathing space to revive its economy, which has been ravaged by the coronavirus pandemic.

Kenya’s National Treasury Secretary Ukur Yatani said the deal with Beijing would give the country “the opportunity and a break on the kind of liquidity that we desire”.

The reprieve came just hours before Kenya was set to make its first repayment on a US$1.48 billion loan from the Export-Import Bank of China (Exim Bank) that was used to build a railway line from the capital Nairobi to the town of Naivasha in the Central Rift Valley.

“We can now use that money to honour our obligations, including continuing to finance the national government and county governments,” Yatani told the media on Wednesday.

“We are happy to get the feedback that we don’t need to pay now,” he said.