This archive report was first published on 4 January 2020.
Kenya's loan repayments to China for the current financial year are set to increase significantly, jumping from KSh31 billion to KSh71.4 billion as the country starts repaying the Standard Gauge Railway (SGR) loan.
According to Business Daily, taxpayers will shoulder part of the 130% increase due to revenue shortfalls from the project. The project has been struggling to break even, with inflows from passenger and freight services averaging a monthly sales of KSh841 million, which is only 56% of the operational costs.
However, Acting Treasury CS, Ukur Yattani, believes that the project will break even by next year, easing the pressure on the Railway Development Levy and budget supplements.
As per the agreements made with Exim bank in May 2014, the repayments commence after the end of the 5-year grace period. Kenya has 15 years to repay the SGR loan.
Yattani confirmed that the Treasury has commenced the payment process, transferring KSh10 billion to Exim bank, which will hit their bank account by the first week of January.
Repayments in the next financial year will increase to KSh84.3 billion, then later KSh111.4 billion in the financial year 2021/2022.
