After failing to repay Chinese loans used to construct the Standard Gauge Railway (SGR), dubbed the nation’s largest infrastructure project since independence, Kenya’s debt crisis has gotten worse.
Nairobi broke its loan agreement in the fiscal year that ended in June, according to National Treasury data, which prompted Beijing to take action.
![Festus Makori and Jerica Muthoni. [Lilian Chepkoech]](https://mkenyaleo.co.ke/wp-content/uploads/2024/04/Q16uLG6Y0KB9b14AiLHv6W3TOXDWD0bftwRfm4YQ-220x150.jpg)
As a result, Kenya was penalized a whopping KSh 1.312 billion by the Export Import Bank of China and other lenders, highlighting the growing challenge facing President William Ruto’s administration in controlling debt.
“This KSh 1.312 billion relates to the cost of default on interest at 1% of the due amount,” the documents stated as reported by Business Daily.
The SGR running from Mombasa to Nairobi cost taxpayers over KSh 320 billion, while the line from Nairobi to Naivasha cost another KSh 150 billion.
For the fourth consecutive year, the multi-billion project failed to break even, with revenues generated from passenger and cargo services deemed little.
The cost of operating the project has been increasing yearly amid dwindling revenues.
In the year to June, operation costs stood at KSh 18.5 billion against sales of KSh 15 billion.
