Kenya has initiated discussions with China to prolong repayment deadlines and potentially convert some of its dollar-denominated loans into Yuan, aiming to alleviate financial strain.

John Mbadi, the Treasury Cabinet Secretary, highlighted that Kenya is currently formulating strategies to extend repayment terms and restructure a portion of its USD loans into Chinese currency. Currently, about USD 1 billion annually is allocated towards repaying China, which remains Kenya’s largest bilateral creditor.

Kenya’s Debt Overview

The Central Bank of Kenya reported that public debt increased from USD 11,491.98 billion in April to USD 11,511.72 billion in May, while external debt went up from USD 5,327.88 billion to USD 5,308.18 billion over the same period. Domestic debt also witnessed a rise, jumping from USD 6,164.10 billion to USD 6,203.54 billion.

Approximately 45.12% of government loans originate from banks, followed by parastatals at 5.92%, insurance companies at 7.24%, pension funds at 28.82%, and other investors at 12.90%.

Expected Debt Payments

For the 2025-2026 fiscal year, Kenya anticipates paying about USD 233 million in loan interest to China. It is also expected to remit USD 8.22 million and USD 234 million to the China Development Bank and China Exim Bank, respectively.

Debt Risk Assessment

The International Monetary Fund classifies Kenya as high-risk regarding debt distress due to mounting repayment obligations and sluggish revenue growth. External borrowing for infrastructure projects places additional strain on public funds.