Kenya to Pay Sh3 bn to Export-Import Bank for Due KQ Loan

Kenya is expected to wire Ksh 3.3 billion to Export-Import Bank by the close of business tomorrow to cover an overdue KQ debt taken over by the state last year. According to the treasury, this payment will add up to Kshs 8 billion paid this month alone.

“As part of a standard process, the Export-Import Bank of the US issued what is known as a demand notice to the Government of Kenya for an overdue payment. On March 3, the GoK paid USD37.4 million (Ksh4.77 billion) in overdue principal, and is processing the additional overdue principal and interest of USD24.8 million by March 31, 2023,” said Sean Bartlett, Senior Vice President of Communications of Exim Bank.

Read: KQ Records Kshs 38.3 Billion Loss for FY’2022

The demand notice simply requires the debtor to wire any outstanding payments failure to which the creditor is obliged to take legal action.

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However, the Exim Bank clarified that the demand notice did not demand the full payment of the outstanding amount. Mr Bartlett explained that Exim is working closely with Kenya to draft the way forward in regards to the payment of the loan. The senior VC attributed this to the long history of working with the GoK and the Kenya Airways.

Read: Kenya Airways Needs to Improve on Operating Efficiency

The Government of Kenya took over this 10-year tenure loan last year having a guarantor of the loan in 2017. KQ has since borrowed a total of Ksh110.54 billion from Exim Bank to acquire seven planes and an engine. However, the airline has been struggling to service the loan attributable to the cashflow challenges and disruptions from the Covid-19 pandemic.

As a result, the state had to take over 62.4% of the loan it had guaranteed the company.

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