Kenya has begun negotiations with China to extend its repayment terms and convert some of its dollar-denominated loans into Yuan, aiming to ease pressure on the country’s finances.
According to Treasury Cabinet Secretary (CS) John Mbadi, Kenya is currently working on expanding repayment terms and transferring a portion of its USD loans into Yuan. The country spends approximately USD 1 billion every year paying off its debt to China, which positions itself as its largest bilateral creditor.
Loan payments from the Export-Import Bank of China accounted for nearly 25% of foreign debt servicing for the fiscal year ending in June 2025. The Cabinet Secretary stated that converting repayment from USD to Chinese Yuan may reduce interest rates by nearly half, and expanding the term would release financial space.
Kenya’s debt explained
The Central Bank of Kenya (CBK) disclosed that the country’s public debt rose from USD 11,491.98 billion in April 2025 to USD 11,511.72 billion in May 2025. Additionally, its external debt increased from USD 5,327.88 to USD 5,308.18 billion during the reviewed period. Domestic debt also soared from USD 6,164.10 billion to USD 6,203.54 billion. In Kenya, banks make up approximately 45.12% of all government loans, parastatals (5.92%), insurance companies (7.24%), pension funds (28.82%), and other investors (12.90%).
Furthermore, in the 2025-2026 financial year, Kenya’s loan interest payments to China are expected to reach approximately USD 233 million. The Treasury also projected that payments to China Development Bank and China Exim Bank would sum USD 8.22 million and USD 234 million, respectively. These estimates come after the signing of finance agreements between Kenya’s President and the Chinese government in April 2025.
When it comes to Kenya’s risk of debt distress, the International Monetary Fund categorised the country as being at high risk due to its scaling repayment obligations and slow revenue expansion. Additionally, more pressure is put on public funds from external borrowing for infrastructure.
