Kenya remained in the spotlight yesterday after Transport Secretary-Designate Kipchumba Murkomen said that the country plans to ask China for a longer repayment period on US$5bn of loans it used to build a new railway line.
Murkomen said that debt servicing of the infrastructure loan is choking the economy, adding that if the government manages to extend the repayment on the loan, it will ease the burden and enable the government to use the funds for other parts of the economy. Murkomen said that the government is looking to renegotiate its Export-Import Bank of China loans, which mature in 15 to 20 years to 50 years.
While Kenya’s infrastructure drive has made it a regional trade hub, the massive infrastructure spending has resulted in a marked increase in public debt. According to National Treasury, Kenya’s debt stood at KES8.58trn at the end of June, which is equivalent to 67.8 percent of GDP. This compared a debt-to-GDP ratio of around 40 percent in 2012.