Kenya moves to seek aid from IMF to repay China loans

Sugar prices now rise by 30 percent a kilo as manufacturing companies grapple with hitches and maintenance of machinery.

Through the Treasury, the financiers says it could use its additional allocation of IMF reserves in Special Drawing Rights (SDR) assets, which can be converted to government-backed money, as a way of repayment.

SDRs are the IMF’s unit of exchange based on sterling, dollars, euros, yen and yuan, and can be used to settle obligations like repayment of foreign public debt.

Director-general for public debt management office at the Treasury Haron Sirima said Kenya has an a raft of options including “use of additional SDR allocation by the IMF” to fill the cash hole left after Nairobi started to service loans in July from China

Kenya had expected to extend a debt repayment moratorium from bilateral lenders, which started, in January 2021, by another six months to December 2021, saving to pay over 50 billion Beijing lenders.

Dr Sirima says response id thus positive from Kenya.

Kenya spent Sh99.73 billion less than the cash it had initially budgeted for servicing external debt for the year ended June 2021, partly on the back of the six-month debt relief.

While China is a G20 member and a signatory to the deal, a large proportion of its loans to Kenya has been made on a commercial basis by government agencies, quasi-public corporations and by state-owned banks, such as China Development Bank and Exim Bank of China.

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