The National Treasury has dismissed sections of media reports that the Chinese government has fined it to the tune of KSh 1.321 billion for defaulting on the Standard Gauge Railway (SGR) loan.
In a statement, the Treasury said the country has never defaulted on settling its debt service obligation.
“The National Treasury and Planning has noted with concerns and dismay, an erroneous and alarming headline story published by the Business Daily on Thursday, October 13, claiming that Kenya has defaulted on its external debt service obligation to the People’s Republic of China on account of the SGR loan,
“We wish to state categorically, that Kenya has never defaulted on the settlement of its debt obligations to any of its creditors nor has any creditors filed or reported any claim of default on debt service payments on facilities extended to the Government of Kenya,” the Treasury said.
It further said that all public debt including the SGR loan is paid from the Consolidated Fund in accordance with the Public Finance Management Act, 2012.
Earlier on, Kivumbi.co.ke had reported that the government of Kenya had defaulted on a Chinese loan prompting the lender to find the country to the tune of KSh 1.312 billion.
“This (KSh1.312 billion) relates to the cost of default on interest at one percent of the due amount.”
It was also reported that default came in a year when Kenya had asked for an extension of the debt repayment moratorium from bilateral lenders but the Exim Bank of China, opposed Kenya’s application for a debt repayment holiday.
Further, the default was due to the fact that the country’s biggest infrastructure project since independence has been making losses instead of profits.
