Kenya’s decision to convert several Chinese railway loans from US dollars into Chinese yuan is attracting interest from other heavily indebted countries, according to a new study by AidData. The restructuring, which also included longer repayment periods and additional grace periods, is expected to reduce Kenya’s annual debt-servicing costs by about $215 million. The report identified Ethiopia, Mozambique, Zambia, Pakistan, and Indonesia as potential candidates for similar arrangements. Ethiopia could save as much as $778 million if it secured terms similar to Kenya’s, the study found. Researchers say the move aligns with China’s broader effort to expand international use of the yuan through cross-border lending. However, analysts caution that the strategy carries risk, since countries must still source yuan to make payments, and savings could shrink if local currencies weaken or renminbi liquidity becomes costly to access.
Reuters