Kenya has walked back a statement suggesting it had discussed debt restructuring with China, causing confusion over the outcome of a recent meeting between the two nations’ top finance officials.
Following a meeting between Chinese Finance Minister Lan Foan and his Kenyan counterpart John Mbadi in Beijing, Kenya’s finance ministry initially posted on social media that China had expressed its willingness to facilitate debt restructuring and concessional financing to help stabilize Kenya’s economy. The post was later deleted and republished, omitting the reference to debt restructuring and concessional financing.
In a follow-up statement, Kenya’s finance ministry clarified that no discussions on debt restructuring had taken place. The Chinese finance ministry did not immediately respond to inquiries regarding the situation.
Kenya has been grappling with a heavy debt burden, and rising service costs have strained its finances. The East African nation is seeking to manage its debts while securing stronger trade and investment ties with China, its largest bilateral lender. Kenya’s debt is largely the result of loans taken to finance major infrastructure projects, including the construction of a modern railway line connecting the port city of Mombasa to the inland regions.
The initial social media post, which was later retracted, had suggested that China was open to discussing measures to alleviate Kenya’s debt burden. However, this assertion was not corroborated by Kenya’s official clarification, which reiterated the countries’ commitment to deepening economic cooperation, particularly in trade, infrastructure, and financial collaboration.
The controversy follows a turbulent period for Kenya’s finances. Last month, the country’s decision to cancel the final review of its International Monetary Fund (IMF) program led to a dip in the value of its dollar bonds, drawing the attention of international investors.
Kenya’s President William Ruto, who assumed office in September 2022, has repeatedly pledged not to default on external debt and is working to boost revenue while reducing fiscal waste. However, his administration has faced significant challenges, including public opposition to tax hikes, most notably during the youth-led protests last year that led to dozens of deaths.
To diversify funding sources, Ruto’s government recently secured a $1.5 billion bond deal with the United Arab Emirates, further highlighting Kenya’s efforts to ease its debt pressures while seeking continued infrastructure investments.