Kenya has renegotiated three Chinese loans used to finance the Standard Gauge Railway (SGR), extending the repayment period to 2040 in a move aimed at easing annual debt servicing pressures.

According to the National Treasury, the revised terms convert the loans into a 15-year facility beginning this year, including a four-year grace period on principal repayments.

The loans, originally due to mature between 2029 and 2035, have also been converted from dollars into Chinese yuan.

Treasury Cabinet Secretary John Mbadi said the restructuring will significantly reduce annual repayment costs. “The loans will now be paid over 11 years, with a four-year grace period, making a total of 15 years,” he said on Thursday.

Officials estimate the restructuring will cut annual SGR loan servicing costs from about Sh50 billion to Sh37 billion.

The currency conversion is also expected to save Kenya roughly $215 million (Sh27.7 billion) annually by reducing exposure to dollar-related exchange rate and interest rate risks.

Kenya borrowed about Sh655 billion ($5.08 billion) from the China Exim Bank by 2015 to finance the SGR from Mombasa to Nairobi and later to Naivasha. Interest payments were made twice yearly, in January and July.

The move comes as public debt servicing consumes more than half of government revenues, with Kenya’s total public debt nearing Sh12 trillion, or about 70 percent of GDP.

The government is pursuing measures such as extending debt maturities and securitising revenue to ease repayment pressures and fund infrastructure projects.

President William Ruto’s economic adviser, David Ndii, said Western lenders, including the World Bank and the IMF, supported the loan restructuring to prevent their financing from being used to repay other creditors.

China has not issued new loans beyond the SGR facilities, leading to a decline in Kenya’s debt to Beijing.

Treasury data shows outstanding Chinese loans fell by 18.8 percent over five years, from Sh764.2 billion in September 2021 to Sh620.3 billion by September 2025.