The National Treasury has paid up an additional Ksh 2.7 billion Kenya Airways (KQ) debt in the three months to the end of September.
This is after inheriting the debt from the national carrier that has been making losses despite flights around the globe.
According to data from the Controller of Budget, the repayments in the quarter include Ksh 2.37 billion for principal repayments and Ksh 351.29 million for interest payments.
The recent payment brings cumulative exchequer payments on KQ’s guaranteed debt to Ksh 13.35 billion with the first repayment done in the quarter ending December 2022.
“The total amount paid on guaranteed loans during the first three months of FY 2023/24 amounted to Sh2.72 billion, which was payment for Kenya Airways loan comprising of Sh2.37 billion for principal repayment and Sh351.29 million for interest payments,” the COB report read in part as quoted by Business Daily.
Business Daily adds that last year, the Treasury told the IMF it would take over the debt contracted in 2017 from the USA Export-Import Bank (Exim) as facilitation to the better management of risk for the national carrier including the potential call-up of the guarantee.
In February, Treasury Principal Secretary Chris Kiptoo told MPs that the Exim Bank USA had handed in a default notice after the delayed payment of the guaranteed loan by KQ.
Despite paying down more than Sh.13 billion, KQ’s guaranteed debt has soared by 13.4 percent since September last year to Sh87.36 billion from Sh76.97 billion, mainly from the sharp depreciation of the Kenyan Shilling.
KQ’s debt takeover by the exchequer, also known as debt novation, is part of a wider restructuring of KQ operations, seeking to support the carrier at the least cost to the government.
The plan is set to further incorporate additional capital injection by the State, cost cuts, among other plans, network optimisation, and the development of key performance indicators for KQ senior executives.
This comes as the government announced plans to privatize some parastatals including KICC, the Kenya Pipeline Company (KPC), and Kenya Seed Company, a decision that elicited an uproar from Kenyans and political leaders, especially on selling an entity like KICC.
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