The government will spend a total of Sh61.3 billion in the next four years to service Kenya Airways’ loans it had guaranteed amid growing pressure by the International Monetary Fund (IMF) to cease the handouts.
Documents tabled in Parliament show that the payments will jump by Sh1.43 billion to Sh16 billion in the current financial year, and will grow further in the remaining years in the form of interest and principal payments.
The payments are for a multi-billion-shilling loan that the National Treasury guaranteed the carrier after years of losses left KQ unable to service debt owed to international lenders notably the US Exim Bank.
The IMF on Thursday said the Treasury should speed up options already being considered to end the streak of losses at KQ and help the carrier stop reliance on taxpayers for bailouts.
“By June 2027, a total of Sh61.3 billion will be paid on the same (KQ guaranteed loan). Since these are taxpayer resources, value for money review is being undertaken,” documents tabled in Parliament read.
The American lender slapped the Treasury with a default notice for delayed payment of Sh57.8 billion in December, highlighting pressure on the exchequer over the loan.
KQ originally had loans amounting to $842 million (Sh74 billion at the then exchange rate of 88) to the US Exim Bank, of which the government guaranteed a $525 million (Sh46.2 billion) portion.
The National Assembly approved the Treasury’s take-over of the loan six years ago, as mounting losses made it hard for KQ to service the debt.
The IMF, a key financier of the Kenyan Government has included the reforms at KQ as part of the tough conditions for an extended credit facility to the Exchequer.
“It is the stated objective of the government that KQ should be weaned off budgetary support by December 2023,” IMF says.
The government —with a 48.9 percent shareholding in the carrier— is keen to bring on board a strategic investor as part of an ambitious move to steer the airline back to profitability.
KQ targets to identify a financial adviser by December, to help develop an investor memo to guide the selection of the preferred investor(s).
Read: State grants Kenya Airways holiday on Sh41bn loan
The Treasury has set a 2027 deadline to clear the guaranteed KQ debt in the 2026/27 fiscal year and the money it will have spent will be reflected as shareholder loans to the struggling carrier.
The Sh1.43 billion increase in the payments due for the current financial year comprise Sh1.24 billion in principal payments and Sh186.43 million in respect of interest payments.
