People dance to celebrate the launch of the Nairobi-Naivasha Standard Gauge Railway (SGR) cargo service in Nairobi, Kenya, on Dec. 17, 2019. (Xinhua/Li Yan)
Chinese infrastructure projects being undertaken in Kenya are viable because they will have a positive effect on the economy, a senior government official said.
NAIROBI, Dec. 2 (Xinhua) -- Chinese infrastructure projects being undertaken in Kenya are viable because they will have a positive effect on the economy, a senior government official said on Tuesday.
Ukur Yatani, Cabinet Secretary of National Treasury and Planning told the parliamentary committee on finance and national planning that the Chinese have undertaken and financed major road and rail projects that have eased transportation of people and goods across the country.
"The rate of completion of the projects has been fast and they also have a long-term effect on the economy which is very good," Yatani said.
He noted that on average the interest rate for Chinese loans to Kenya is three percent per year which is below the commercial lending rates in the country.
"There is a perception that we are getting loans from foreign governments at very high rates," Yatani noted.
A train arrives at the Maai Mahiu Station of the Nairobi-Naivasha Standard Gauge Railway (SGR) in Kenya, Oct. 16, 2019. (Xinhua/Li Yan)
He added that it is standard practice for governments to borrow in order to fund projects that will result in faster economic development.
He added that Kenya has maintained public debt that is below the international debt sustainability threshold. "We are therefore not seeking postponement or forgiveness of debt because we are not facing any difficulty in repaying the loans," he revealed.
He observed that the east African nation is keen to avoid the negative consequences of defaulting on loans received.
According to the Treasury, the government is also keen to restructure the state-owned enterprises that are a financial burden to taxpayers.
"Over time we have created many state enterprises that have led to duplication of functions and so some will be merged or dissolved," Yatani said. ■