Nairobi [Kenya], The United States has warned that Kenya's growing debt burden is undermining its ability to provide quality health care and education to its citizens, highlighting costly debt incurred over the past decade partly with China, Business Daily Africa reports.
The Kenyan business daily cited a recently released biennial report by the Office of the United States Trade Representative on the implementation of the African Growth and Opportunity Act, stating that "Kenya's ability to adequately fund its social services (including education, health care and housing) and poverty reduction programs are increasingly constrained by the cost of servicing their debt, in part due to the continued weakening of the local currency."
"As a result, Kenya continues to allocate more money for debt repayment than for development spending," the report quotes.
Kenya is facing violent protests due to its ongoing economic crisis. The East African nation's total debt stands at $80 billion, representing 68 percent of its GDP, exceeding the World Bank and IMF recommended maximum of 55 percent.
Most of Kenya's debt is held by international bondholders, with China being the largest bilateral creditor, owed $5.7 billion.
The Kenya Business Daily reported that rising debt service expenses have in recent years exceeded expenditure on salaries and wages, administration, operation and maintenance of public offices for the national government.
"This underlines the impact of the commercial and semi-concessional loans Kenya has taken out over the past decade to build much-needed roads, bridges, power plants and a modern railway line," Business Daily Africa said in the report.
https://x.com/BD_Africa/status/1808372604182429921
He mentioned that the latest Treasury disclosures, for example, show that debt repayment costs gobbled up an equivalent of three-quarters (75.47 percent) of taxes collected in 11 months of the financial year just ended.
Washington's concerns stem from growing scrutiny from the United States and its Western allies over secret clauses in loans China has offered to African countries.
The Kenyan business daily cited a study by AidData, a research lab at the College of William & Mary in the US, which found that the conditions of Beijing's loan agreements with developing countries were generally secret and required Borrowing nations, such as Kenya, will prioritize repayment to Chinese state lenders are ahead of other creditors.
The data set, based on an analysis of loan agreements between 2000 and 2019, suggested that Chinese agreements have clauses for "more elaborate payment safeguards" than their "peers in the office credit market."
The business daily said Kenya paid China Sh152.69 billion in interest and principal sums due in the financial year ending June 2024, up 42.14 percent from Sh107.42 billion in the year ending in June 2023.
The United States says rising debt obligations, corruption and the pandemic's lingering effects on household and business incomes have nearly paralyzed Kenya's march toward a "middle-income industrialized country that provides a high standard of living." to all its citizens by 2030, in a clean and safe environment."
The Kenyan business daily cited a recently released biennial report by the Office of the United States Trade Representative on the implementation of the African Growth and Opportunity Act, stating that "Kenya's ability to adequately fund its social services (including education, health care and housing) and poverty reduction programs are increasingly constrained by the cost of servicing their debt, in part due to the continued weakening of the local currency."
"As a result, Kenya continues to allocate more money for debt repayment than for development spending," the report quotes.
Kenya is facing violent protests due to its ongoing economic crisis. The East African nation's total debt stands at $80 billion, representing 68 percent of its GDP, exceeding the World Bank and IMF recommended maximum of 55 percent.
Most of Kenya's debt is held by international bondholders, with China being the largest bilateral creditor, owed $5.7 billion.
The Kenya Business Daily reported that rising debt service expenses have in recent years exceeded expenditure on salaries and wages, administration, operation and maintenance of public offices for the national government.
"This underlines the impact of the commercial and semi-concessional loans Kenya has taken out over the past decade to build much-needed roads, bridges, power plants and a modern railway line," Business Daily Africa said in the report.
https://x.com/BD_Africa/status/1808372604182429921
He mentioned that the latest Treasury disclosures, for example, show that debt repayment costs gobbled up an equivalent of three-quarters (75.47 percent) of taxes collected in 11 months of the financial year just ended.
Washington's concerns stem from growing scrutiny from the United States and its Western allies over secret clauses in loans China has offered to African countries.
The Kenyan business daily cited a study by AidData, a research lab at the College of William & Mary in the US, which found that the conditions of Beijing's loan agreements with developing countries were generally secret and required Borrowing nations, such as Kenya, will prioritize repayment to Chinese state lenders are ahead of other creditors.
The data set, based on an analysis of loan agreements between 2000 and 2019, suggested that Chinese agreements have clauses for "more elaborate payment safeguards" than their "peers in the office credit market."
The business daily said Kenya paid China Sh152.69 billion in interest and principal sums due in the financial year ending June 2024, up 42.14 percent from Sh107.42 billion in the year ending in June 2023.
The United States says rising debt obligations, corruption and the pandemic's lingering effects on household and business incomes have nearly paralyzed Kenya's march toward a "middle-income industrialized country that provides a high standard of living." to all its citizens by 2030, in a clean and safe environment."
