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Kenya’s foreign exchange reserves have experienced a significant drop of USD 487 million (about KES 63.9 billion) over the past week, following substantial repayments of external debt.
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The decrease in reserves follows the government’s repayment of USD 533 million (about KES 70 billion) in external loans, which includes USD 433 million (KES 56.8 billion) used to service a loan from China.
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The reduction has decreased the import cover from 4.1 months to 3.9 months. Import cover refers to the number of months the available foreign exchange reserves can finance imports.
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Previous reports indicated that Kenya had spent KES 152.69 billion (approximately USD 1.15 billion) repaying China in the last fiscal year This included USD 705.05 million (KES 100.47 billion) in principal repayment and USD 366.46 million (KES 52.22 billion) in interest.
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Additionally, Kenya paid USD 286.04 million (KES 40.76 billion) more than initially planned for the fiscal year.
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The secretive nature of Beijing’s loan terms with developing countries like Kenya often means borrowers must prioritise repayments to China, placing a considerable burden on the Kenyan public.