Ruto’s $1 Billion Appeal to China for Unfinished Projects
In an interview with a local radio station, Vice President Rigathi Gachagua revealed that President Ruto will request a Ksh148.6 billion loan from China when he visits Beijing later this month.
According to the second-in-command, the funds will be used to conclude road construction projects that have been delayed.
Additionally, the chief of state will request a repayment extension for previous Chinese loans.
“Can we talk to see if you can add us time, so we can pay slowly, and add us a little money so we can finish road construction?” Gachagua said, referring to what the president would say to the Asian nation’s leaders.
“If we get $1 billion (Ksh148.6 billion) we can be able to give these people (contractors) the money they are owed so they can return so even as we pay the debt, the roads are completed,” the Deputy President added.
During his campaign, the President criticized former President Uhuru Kenyatta for overborrowing foreign loans.
Currently, the nation owes China over Ksh1.1 trillion, the majority of which was borrowed during Kenyatta’s reign.
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Kenyatta utilized the funds to develop infrastructure initiatives such as roads. Since then, however, the projects have stagnated, with contractors complaining of nonpayment.
A substantial portion of the Ksh1.1 trillion was used to build the standard gauge railway connecting Nairobi to Mombasa Port.
Chinese SGR loans are denominated in dollars, and two of them have variable interest rates that are either 3.6% or 3% above the average LIBOR (London Interbank Offered Rate).
In addition, global monetary tightening and a weakening Kenyan shilling have increased the burden of servicing them after initial grace periods on principal repayments expired, with servicing costs ranging from Ksh125.9 billion to Ksh118.5 billion between July 2022 and March 2023.
This, coupled with the Ksh297.6 billion Eurobond maturing in 2024, has compelled President Ruto to implement several taxes and measures to increase loan repayment revenues.
Ruto’s $1 Billion Appeal to China for Unfinished Projects
