Yatani dismisses claims Kenya was fined Ksh1.3B by China for allegedly defaulting on SGR loans

Thursday, October 13th, 2022 19:11 | By
Chinese-build SGR train. PHOTO/Courtesy.

Treasury Cabinet Secretary (CS) Ukur Yatani has dismissed claims that Kenya was fined Ksh1.3 billion for allegedly defaulting on Standard Gauge Railway (SGR) loan to China.

The CS was reacting to a report by Business Daily which alleged that Kenya, in the financial year ending June 2021, failed to honour the agreement to settle the loans used to build SGR.

"This Ksh1.312 billion relates to the cost of default on interest at 1% of the due amount," the documents stated.

Reacting to the report, Yatani insisted that Kenya has not defaulted on any external loan. He added that the country had not accumulated any debt arrears in decades to suggest difficulties in debt servicing.

"We wish to state categorically, that Kenya has never defaulted on its settlement of its debt service obligations to any of its creditors filed or reported any claim of default on debt service payments on facilities extended to the government of Kenya. Furthermore, Kenya has not accumulated any debt arrears in decades to suggest difficulties in debt servicing," Yatani said in a statement.

"As a country accessing international financial markets to raise resources, Kenya undergoes frequent independent sovereign rating reviews whose outcomes are published widely. At no time has Kenya been flagged as a country defaulting on its external debt obligations," he added.

Public debt

The outgoing Treasury CS further noted that all public loans are paid from the Consolidated Fund and that the government prioritizes debt repayment over other expenditures.

"It is also important to note, that all public debt, including the SGR loans are paid from the Consolidated Fund in accordance with the Public Management Act. 2012. Debt service is a first charge on the Consolidated Fund and takes precedence over other forms of expenditure," Yatani said.

The Treasury CS assured the country's creditors and the general public that Kenya is not in a financial mess as reported in the press.

"We want to assure our creditors, development partners, investors and the general public that Kenya's financial position is sound and robust," he said.

He further warned the media to desist from publishing misinformation which has the potential of harming the country's reputation in the international financial markets.

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