The portion of Kenya’s external debt denominated in Chinese currency nearly doubled between September and December 2016, pushed up by a Sh20.7 billion ($200 million) semi-concessional loan disbursement from Beijing.
Latest data from Central Bank of Kenya shows that the yuan-denominated portion of external debt stood at 6.6 per cent at the end of the second fiscal quarter of 2016/2017, up from 3.9 per cent at the end of September.
Also up was the debt denominated in US dollars — from 59.9 per cent to 63.1 per cent — thanks to a loan from the PTA Bank.
“The proportion held in the Chinese yuan and the US dollar increased mainly on account of the of $100 million disbursement from the Preferential Trade Area Bank and Chinese yuan denominated disbursement (equivalent to $200 million) from the Chinese government,” said the CBK in its quarterly economic review covering October to December.
“Debt owed to China, Kenya’s largest bilateral lender, amounted to $3.5 billion (Sh361.6 billion), or 19.4 per cent of the total external debt in the second quarter of the 2016/17 fiscal year.”
Total external debt stood at Sh1.83 trillion, or $17.7 billion, at the end of 2016.
Other than the borrowing for budgetary support, Kenya has also been taking large Chinese loans to finance key infrastructure projects, such as the standard gauge railway whose first phase is due to be commissioned next month.
The percentage of debt denominated in the other three hard currencies — the euro, British pound and Japanese yen went down quarter on quarter.
Pound-denominated debt was 3.5 per cent of the whole debt at the end of December compared to 5.1 per cent in September, while that of the Euro dropped from 22.2 per cent to 18.8 per cent.
The debt in yen stood at 7.7 per cent in December, compared with 8.4 per cent in September.
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Credit: Business Daily
