CS Mbadi retracts comment on China debt talks, sowing confusion

Kenya denied on Wednesday it had discussed debt restructuring with China's finance minister after amending a reference in a social media post released in the wake of a meeting between the two countries' top finance officials.

China's Finance Minister Lan Foan and his Kenyan counterpart John Mbadi had held talks in Beijing, aimed at securing stronger trade and investment ties between the East African nation and the world's second largest economy.

"He (China's finance minister) also expressed China's willingness to facilitate discussions on debt restructuring and concessional financing to support Kenya's economic stability," the finance ministry said in a post on X on Wednesday morning.

The post was then deleted and later reposted without the reference to restructuring or concessional financing.

Kenya, which is struggling with a heavy debt load and the accompanying high debt service costs, caught investor attention last month when it ditched the final review of its programme with the International Monetary Fund, sending its dollar bonds lower.

Asked for more details, the Kenyan finance ministry said there had been no discussions on restructuring debt at the meeting in Beijing. China's finance ministry did not immediately respond to a request for comment.

China has become Kenya's biggest bilateral lender after Nairobi took a spate of loans to finance infrastructure construction projects, including a modern railway line from the port of Mombasa into the hinterland.

Kenyan officials have been engaging with their Chinese counterparts to secure funds for more projects, including the extension of that railway line to the border with Uganda.

"Kenya and China have reaffirmed their commitment to deepening economic cooperation, with a focus on trade, infrastructure investment, and financial collaboration," the Kenyan ministry said in a summary of a meeting.

Kenyan President William Ruto, who took over in September 2022, has vowed that his government will not default on its external debt, pledging to cut waste and boost revenue to tackle the challenge.

But his efforts have been met with stiff resistance, including last year's youth-led anti-tax hike protests, in which dozens of people were killed.

Ruto has also been seeking to diversify sources of financing, including striking a deal for a privately placed bond with the United Arab Emirates for $1.5 billion.