Kenya defends role in $152mln loan payment cash
The loan payment, however, has attracted criticism as the State is put on the spot for guaranteeing the loan for working capital, in breach of the law.
Documents show that the money was shared by the lenders following a settlement agreement with the government in September 2024 after KQ defaulted on the facility, sparking pressure from the banks on Treasury, which guaranteed the airline.
I&M Bank received Ksh5.45 billion ($42.2 million), KCB Bank Ksh4.8 billion ($37.17 million), Diamond Trust Bank Ksh2.9 billion ($22.45 million) and Ecobank Ksh2.2 billion ($17.03 million), the four topping the list of beneficiaries by amount received.
The National Bank of Kenya received Ksh1.5 billion ($11.61 million), Cooperative Bank received Ksh1.03 billion ($7.98 million), NCBA Ksh871.9 million ($6.75 million) and Equity Bank Ksh838.8 million ($67.66 million), documents show.
Treasury raided the government's emergency kitty under Article 223 of the Constitution and withdrew Ksh19.69 billion ($152.46 million) for settlement of the facility, booking the transaction under the Consolidated Fund Services (CFS) budget line.
The transaction, however, triggered criticism in Parliament with Busia Senator Okiya Omtatah alleging siphoning of the billions of shillings.
Treasury Cabinet Secretary John Mbadi said the government had not budgeted for the settlement of the loan it guaranteed KQ in 2017, and only knew of the default in September last year.
Defaulted'KQ defaulted on its repayment obligations amounting to Ksh19.69 billion ($152.46 million). The default necessitated the Government of Kenya to enter into a settlement agreement with consenting creditors on September 25, 2024 as a guarantor,' Mr Mbadi said in a response dated June 10.
In the response, he noted that the government guaranteed MTC & Corporate Services Limited—a private firm—and a group of creditors $225 million in November 2017. At the point of default in September last year, KQ had cleared just a third ($75 million) of the loan.
KQ borrowed the billions of shillings from the lenders for working capital needs, at a time it had been in the loss-making territory for several years.'The total expenditure was Ksh19,685,136,689 ($152.42 million) against the Exchequer request of Ksh19,698,584,739 ($152.52 million). The balance of Ksh13,448,049 ($104,127) was refunded to the exchequer account on January 14,' Treasury said.
Mr Omtatah has said the government guaranteeing KQ a loan for working capital went against the law. Section 58 of the Public Finance Management Act, 2012 states: 'The Cabinet Secretary shall not guarantee a loan unless the loan is for a capital project (and) the borrower is capable of repaying the loan, and paying any interest or other amount payable in respect of it.'
KQ in 2024 reported total revenues of Ksh188.49 billion ($1.46 billion), Ksh5.4 billion ($41.81 million) in net profits, and Ksh19.8 billion ($153.31 million) as comprehensive income.
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