Tuesday, November 11,
2025 - Kenya’s decision to convert its $5 billion Standard Gauge Railway
(SGR) loan from U.S dollars to Chinese Yuan has drawn caution from the International
Monetary Fund (IMF).
The Treasury confirmed that the conversion of the Ksh 646.15
billion loan was finalized on October 7th, a shift expected to save
the country approximately Ksh27.78 billion (USD 215 million) annually by
lowering interest rates tied to dollar-denominated debt.
While the IMF acknowledged that such currency switches can
be a proactive debt management strategy, it emphasized the need for countries
to weigh cost savings against new vulnerabilities.
“These transactions may lower costs, but they can also
introduce currency risks depending on their structure,” an IMF spokesperson
told Bloomberg.
The IMF urged Kenya to integrate such decisions into a
broader medium-term debt and reserve management strategy to maintain a balance
between cost and risk.
Kenya’s move appears to have influenced neighboring
Ethiopia, which entered talks with Chinese authorities on October 21st
to restructure part of its USD 5.38 billion debt into yuan-denominated loans,
aiming to reduce financing costs and deepen trade ties.
President William Ruto’s economic adviser, David Ndii,
revealed that pressure from Western lenders - including the IMF and World Bank
- played a role in Kenya’s decision.
These institutions reportedly raised concerns that their
dollar-based loans were being used to repay Chinese debt rather than fund
domestic development.
“The Western lenders questioned why they ought to help us
while other lenders were taking out the money,” Ndii said, adding that such
scrutiny often leads to pressure on countries to restructure debt in ways that
retain capital within national economies.
The Kenyan DAILY POST
 loan from US dollars to Chinese Yuan - “It’s Risky”){kind=link}
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