Treasury CS Yatani Responds To SGR Loan Default After China Fine Claims

Fridah Wangechi | 1 year ago
The Standard Gauge Railway. COURTESY

The National Treasury has responded to an article on the Business Daily publication on Thursday, October 13 alleging that China has fined the Kenyan Government Kshs 1.312 billion for defaulting on a loan channeled to the construction of the Standard Gauge Railway.

In a statement released on its social media accounts, the exchequer clarified the country's credit status, assuring that Kenya's financial position was sound and robust contrary to what was portrated by the article.

"We wish to state categorically, that Kenya has never defaulted on its settlement of its debt service obligations to any of its creditors, nor has any creditor 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," the statement penned by Treasury CS Ukur Yatani  read.

Yatani further maintained that Kenya has never been flagged as a country defaulting on its external debt obligations and is highly rated as a country that services its loans.

He also noted that all debts are paid from the Consolidated Fund  accordance with the Public Finance Management Act, 2013 with debt service among the first charges on the fund over other forms of expenditure, and hence should not be a cause for alarm .

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

The Treasury called out the publication for propagating false claims , which it says have the potential to tarnish the country's good name.

"We also call upon the Business Daily to restrain itself from this misinformation, with the potential of harming the country's reputation in the international financial markets," it concluded.

The article alleged that Kenya received over half a trillion shillings from Chinese banks, led by the Export-Import Bank of China, to fund the construction of the SGR from Mombasa to Naivasha, which could have proved to be an additional burden to the taxpayer owing to the magnitude of the debt as the company's revenue is not enough to service the debt.

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