Kenya’s Push For China Debt Relief Hindered By The G20

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Attempts by Kenya’s government to secure a debt relief deal with Beijing amid an economic downturn caused by the 2020 global pandemic have been hindered due to China’s G20 membership status. 

According to Business Daily Africa .com, Kenya’s Treasury Cabinet Secretary Ukur Yatani “said the talks for debt relief to free up funds to fight the Covid-19 pandemic have been delayed on China’s request to strike a deal with Kenya once the G20 debt relief lapses.” 

Kenya initially showed little interest in the G20 debt relief initiative because the deal was deemed restrictive with the tendency to impact Kenya’s future debt rating. This was especially done with the hope that an individual bilateral arrangement with China could help  secure “moratoriums on debt service payments lasting around a year with little conditions.” 

As Kenya’s largest bilateral lender,  Kenya owns China Sh691 billion. Half of this loan was used to construct “the country’s biggest infrastructure project since independence”, the standard gauge railway (SGR). Kenya’s government budget deficit has shot up to 8.2 percent of GDP as of June due to Covid-19. 

According to China’s Ambassador to Egypt, “China will extend the period of debt suspension for the countries most affected by the pandemic, and will encourage Chinese enterprises to conduct friendly consultations with African markets…China is calling on the G20 to extend the suspension of African debt to the countries most affected by the virus.”

Beijing’s dealings with African countries on debt repayment amid economic recovery efforts could either prove or dispel fears surrounding China’s “debt-trap diplomacy” with Africa. 

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