When he travels to Beijing later this month, Kenyan President William Ruto is expected to ask China for a $1 billion loan to revive delayed road projects, according to his deputy, Rigathi Gachahua.
Gachagua, who spoke on a local radio station, disclosed that President Ruto will also ask for a prolongation of the time frame for repaying existing debts. Kenya presently owes more than $8 billion in Chinese loans.
President Ruto’s coalition had previously attacked his predecessor, Uhuru Kenyatta, for amassing a big debt from China, therefore his strategy indicates a dramatic turnaround in policy.
Kenyatta had financed infrastructure projects, like as the Nairobi road, with loans from China. However, a lot of these projects have now come to an end as their contractors left because of unpaid invoices.
Along with the loan request, Ruto would ask Chinese officials to give Kenya’s debt repayment schedule a break.
Kenya was one of the nations highlighted during China’s Belt and Road Initiative, a broad initiative unveiled by President Xi Jinping in 2013 and intended to increase China’s geopolitical and economic power through the construction of the world’s infrastructure.
Before Chinese funding starts to slow down in 2019, there has been a substantial influx of loans to nations like Kenya, which has raised debt levels and associated repayment pressures, raising concerns.
According to official statistics, the Kenyan government is currently spending almost 50% of its income on paying off debts that are coming due, which is severely straining the economy of the country. Foreign debt obligations and a severe drop in the value of the Kenyan shilling have both made this financial problem worse.
In reaction to this financial stress, the president’s office has restricted government officials’ ability to travel abroad, and the cabinet has ordered all ministries to cut their budgets by 10%.
Critical infrastructure needs could be met and some of the financial pressures the Kenyan government is currently under could be relieved by President Ruto’s planned engagement with China for financial support.