U.S. Denies $3.5 Billion Road Risks Debt Stress for Kenya

(Bloomberg) --

The U.S. government denied that developing a proposed expressway between Kenya's biggest cities risks debt stress for the East African nation as it plans to raise its borrowing ceiling to continue funding infrastructure projects.

While Nairobi-based Daily Nation reported last month that the U.S. government halted funding for the highway on concerns of mounting debt, the ambassador to Kenya denied this.

“Contrary to press reports, the highway is an investment that won't saddle Kenya with unsustainable debt,” Ambassador Kyle McCarter said Friday in a statement. “The project by a world-class U.S. company will provide the best engineering solutions for Kenya's infrastructure needs at a lower price than competitors.”

Kenya awarded in 2017 the $3.5 billion project, among its biggest in more than five decades, to Bechtel Group Inc. to develop a 473-kilometer (294-mile) road between the capital, Nairobi and port city of Mombasa.

The expressway would be another project disrupted on concerns of debt or feasibility after China held funding for a section of a railroad earlier this year. The government has proposed to increase its debt ceiling to almost match the size of the economy, and raised its 2019-20 budget-deficit forecast to 6.2% of gross domestic product following revenue shortfalls.

Read more about the road project

The U.S is “fully committed” to the Nairobi-Mombasa expressway and to fulfill the shared pledge of the countries' presidents Donald Trump and Uhuru Kenyatta, “to make this critically needed road a reality,” McCarter said.

To contact the reporter on this story: David Herbling in Nairobi at dherbling@bloomberg.net

To contact the editors responsible for this story: David Malingha at dmalingha@bloomberg.net, Rene Vollgraaff

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