Kenya inaezajipata CRB! Government likely to Default on Loan Repayment

President Uhuru Kenyatta signs into law a Bill creating a 15 percent tax relief for Kenyans ...

Kenya is likely to find itself listed with the Credit Reference Bureau, (CRB) if such a Bureau exists from where the government gets its numerous loans.

According to the International Monetary Fund (IMF), the government’s risk of defaulting on debt repayments has increased to moderate from low.

IMF cited the government’s public investment drive and revenue shortfalls in recent years. The Washington-based lender forecasts that Kenya’s total public debt will reach 63.2 percent of economic output or GDP this year then begin declining.

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Public debt was 58 percent last year and 53.2 percent in 2016.

“The higher level of debt, together with rising reliance on non-concessional borrowing, have raised fiscal vulnerabilities and increased interest payments on public debt to nearly one fifth of revenue, placing Kenya in the top quartile among its peers”, the IMF said in a report released late on Tuesday.

The government led by President Uhuru Kenyatta, began to pour billions into infrastructure projects in 2016, including a Chinese-built railway.

In his second and final term, Kenyatta has said his government will focus on manufacturing and public housing. The IMF recommended Kenya’s Treasury refinance loans at longer maturities to limit refinancing risks.

Defaulting on loans can attract serious penalty from lenders as it has been witnessed in Zambia and Sri Lanka.

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Secret talks are underway for China to take over Zambia’s state power company Zesco after the country defaulted on loan payments, a report by Africa Confidential claimed. The report also said that Zambia’s national broadcasting corporation, ZNBC, is already owned and run by China.

The Africa Confidential report also indicated that a number of projects in Zambia are financed by China, while the country’s debt profile rises in the last five years.

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In December 2017, Sri Lanka handed over one of its strategic ports to a Chinese company  in a deal agreed to boost the cash-strapped island’s finances.

The $1.12 billion deal first announced in July lets a Chinese state company take over the southern port of Hambantota, which straddles the world’s busiest east-west shipping route, on a 99-year lease.

What can Kenya lease in case we default on loans? SGR, JKIA or Maasai Mara?

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