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Kenya Caught in a Potentially Dangerous Loan Repayment Cycle Due to Its SGR Debts to China

The embattled Chinese-financed and constructed Standard Gauge Railway in Kenya that now faces a critical test as to whether it will be able to survive the worsening economic crisis. TONY KARUMBA / AFP

There’s growing concern that the depreciating value of the Kenyan currency is tied to the country’s mounting debt servicing costs to Chinese creditors. Back in July, the Kenyan Treasury began repaying the loans used to build the Standard Gauge Railway after the China Exim Bank refused the government’s request to extend a debt servicing holiday for another six months.

During the same period, the value of the Kenyan currency, the shilling, began to slide from 107.8 to the dollar to a historic low of 112.89 in Friday trading.

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