Kenya’s Debt Settlement for Kenya Airways Reaches $17.6 Million Mark

The Kenyan government continued its effort to alleviate the financial burden on Kenya Airways (KQ) by settling an additional KES 2.7 billion (USD 17.6 million) of the national carrier’s guaranteed debt in the three months ending September 2023. Alongside this principal payment, KES 351.29 million (USD 2.29 million) was also allocated for interest during the same period.

This latest repayment, as reported by the Office of the Controller of Budget (OCOB), brings the total amount disbursed by the National Treasury to KES 13.35 billion (USD 87 million) as of September 2023. The government initiated debt settlement after inheriting the financial obligations of Kenya Airways, with the first payment made in the quarter ending December 2022.

The government had communicated to the International Monetary Fund (IMF) its intention to restructure the national carrier’s debt, including taking over debt contracted in 2014 from the EXIM Bank (United States of America). This strategic move aimed to enhance the management of credit risk for Kenya Airways and address concerns such as the potential invocation of the government’s guarantee. In February 2023, the Export-Import Bank issued a default notice to Kenya for overdue repayments on this USD 831.2 million guaranteed loan.

The ongoing debt takeover by the government is part of a comprehensive restructuring plan for Kenya Airways, encompassing cost-cutting measures and network optimization. This broader strategy aims to support the national carrier at the minimal cost to the government.