November 29, 2017 / 12:47 PM / a year ago

UPDATE 1-AfDB approves $160 mln loan for second Nairobi runway

(Updates with Kenya’s growing debt burden)

NAIROBI, Nov 29 (Reuters) - The African Development Bank (AfDB) has approved a $160 million loan to Kenya for building a second runway at the main airport in the capital Nairobi, the bank said on Wednesday.

The Jomo Kenyatta International Airport (JKIA) has a single runway and plans for a second one were first announced in 2013 to boost Kenya’s standing as a regional travel hub.

Kenya’s debt has soared as the government of President Uhuru Kenyatta, who was sworn in for a second term on Tuesday, has borrowed heavily in recent years to fund infrastructure projects such as the $3 billion Chinese-built railway from Nairobi to Mombasa that was completed this year.

Debt last year was estimated by the International Monetary Fund at 54 percent of economic output. The IMF says significant economic challenges ahead include containing fiscal risks.

Analysts say one problem behind the ballooning budget deficit is that the economy has not grown as much as the government projected. The government cut its growth forecast to 5 percent this year from an initial forecast of nearly 6 percent due to drought and a prolonged and bloody election season.

The airport has a capacity of 6 million passengers a year, and the second runway is expected to more than double that.

“For a hub like Jomo Kenyatta Airport you really have to have a second runway,” James Macharia, the transport minister, told reporters earlier this month.

“The one we have today is 90 capacity utilized so if we grow further you will find we will be having a jam.”

AfDB said the new runway project would involve building a 4.9 km runway and associated infrastructure such as extra parking slots for aircraft and an air rescue firefighting unit. (Reporting by George Obulutsa and Duncan Miriri, editing by David Evans)

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