Kenya is in discussions with China to convert its dollar-denominated railway loan into Chinese yuan, an aide to the finance minister disclosed to Reuters on Wednesday. This confirmation follows an earlier report on the subject by Bloomberg News.
The conversion aims to ease Kenya’s debt burden and reduce fiscal pressures. According to a Treasury official, the move would reduce the interest rate by almost half while helping Kenya mitigate the risks associated with the volatility of the US dollar.
The Standard Gauge Railway, which was completed in 2019, is one of Kenya’s most extensive infrastructure projects since independence, costing about $5 billion. The loan for the railway project has been a source of financial burden for the country, particularly due to the depreciation of the Kenyan shilling against the US dollar.
Kenya has previously defaulted on its SGR loan from China’s Exim Bank, prompting significant penalties. In 2024, Kenya Railways was slapped with a Sh3.5 billion penalty for defaulting on loans borrowed for the project.
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