Kenya expects to receive Ksh122 billion in new loans from external sources, according to Treasury Cabinet Secretary John Mbadi. Mbadi told Reuters that Kenya will keep the $1.5 billion, or Ksh193 billion, privately put bond in the United Arab Emirates to fit into the budget projections for the current fiscal year.
According to Bloomberg, the UAE loan will be disbursed in one tranche and is scheduled to be issued this week. However, Mbadi now claims that the loan has been put on hold as the country assesses budgetary shortages.
This comes as the Supplementary Budget II moves through the National Assembly. According to Mbadi, the judgment allows the government to include the loan into the country’s fiscal framework.
“The reason why we have not done it is that we have to do it within our fiscal framework,” Mbadi told the publication on Friday.
According to Mbadi, the money will be utilized to pay off some maturing debts and to support the budget. “We can use it partly for liability management, partly for budgetary support, or exclusively for budgetary support,” he said.
Mbadi stated that the UAE funding agreement, finalized last year, has an interest rate of 8.25 percent.
The payback will take place in three installments of $500 million (about Ksh89.95 billion at current exchange rates), payable in 2032, 2034, and 2036.
Mbadi indicated that Kenya expects to receive about $950 million (about Ksh122 billion at current exchange rates) in loans and support from various international sources by the end of June.
The World Bank and the African Development Bank have both contributed funds, as have Italy and Germany. Last year, Kenya received a $200 million (about Ksh25.7 billion) loan from the African Development Bank and was in talks with the World Bank about a fresh $750 million (about Ksh96.4 billion) credit.
Regarding the latter, it is unclear whether Kenya and the World Bank have struck a deal, although the government appears confident in collecting the funds.
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