The National Treasury has dismissed reports that have been rife across a section of the media alleging that the Chinese Government has slapped Kenya with a Sh1.312 billion fine.

SGR Train. PHOTO/COURTESY

The alleged fine is for defaulting on the payment of the loan it borrowed to fund the construction of the Standard Gauge Railway.

The Treasury CS Ukur Yatani on Thursday issued a statement dispelling those reports, terming them as erroneous and alarming.

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Yatani categorically clarified that Kenya has never defaulted on servicing any of its loans and no creditor has reported any claim of default on debt service payments by the Kenyan Government.

“The National Treasury & Planning has noted with concern and dismay, an erroneous and alarming headline story published by the Business Daily on 13th October, 2022, claiming that Kenya has defaulted on its external debt service obligations to People's Republic of China on account of the Standard Gauge Railway (SGR) loans,” the statement read in part .

“We wish to state categorically, that Kenya has never defaulted on its settlement of its debt service obligations to any of its creditors, nor has any creditor filed or reported any claim of default on debt service payments on facilities extended to the Government of Kenya.”

SGR Train. PHOTO/COURTESY

Furthermore, the CS disclosed that Kenya has not accumulated any debt arrears in decades to suggest difficulties in debt servicing.

According to the CS, Kenya undergoes frequent independent sovereign rating reviews whose outcomes are published widely.

Therefore, Kenya has never been flagged as a country defaulting on its external debt obligations.

Yatani also noted that all public debt is paid from the Consolidated Fund and debt service is a first charge on the fund, taking precedence over other expenditures.

“It is also important to note, that all public debt, including the SGR loans are paid from the Consolidated Fund in accordance with the Public Finance Management Act, 2012. Debt service is a first charge on the Consolidated Fund and takes precedence over other forms of expenditure,” the statement read.

The Ministry assured made an assurance that Kenya’s financial position is sound.

At the same time, the Treasury cautioned the media against misinformation, which may cause harm to the nation’s international reputation.

“We want to assure our creditors, development partners, investors and the general public that Kenya's financial position is sound and robust,” the Treasury assured.


“We also call upon the Business Daily to restrain itself from this misinformation, with the potential of harming the country's reputation in the international financial markets.”

This comes after Kenya defaulted on the repayment of the Chinese loads borrowed to fund the construction of the SGR from Mombasa to Naivasha.