The Treasury has taken yet another expensive short-term loan from a group of international banks, pushing Kenya further into debt.
Reuters news agency reported that the $800 million (Sh82 billion) syndicated loan deal was signed last Thursday with a consortium of four banks including StanChart, Standard Bank, Citi and Rand Merchant Bank -- and is due to be drawn any time now.
“The deal was signed last Thursday. They are now waiting for the drawdown,” Reuters quoted a source who did not wish to be named.
The terms of the loan were not immediately known and Treasury secretary Henry Rotich was yet to confirm the interest rate chargeable on the loan, its tenor, and what use it is to be put by the time of going to press.
Mr Rotich had announced plans to borrow a total of $1.46 billion (Sh150 billion) through syndicated loans to plug the budget deficit in the current fiscal year ending in June.
Kenya has lined up a Sh2.62 trillion budget to be submitted to parliament next week but expects to collect only Sh1.7 trillion in taxes, leaving the government with a yawning funding gap.
The new loan pushes Kenya’s total debt much closer to the Sh4 trillion mark.
It now means each Kenyan owes creditors about Sh90,000 and growing, based on latest population estimates.
Kenya’s total public debt stood at Sh3.827 trillion or 51.50 per cent of GDP in December 2016, according to latest data from the National Treasury.
Nairobi is also under pressure to settle a two-year $750 million syndicated loan taken in 2015, which falls due in October.
The loan, which is to be paid at an interest rate of eight per cent per annum, was taken at the height of a government cash crunch. It was arranged by Citigroup, Standard Bank and StanChart.
Mr Rotich was also yet to confirm if the new loan would be used to retire the outstanding facility.
Kenya has previously borrowed to settle a syndicated loan that was falling due.
The first use of the $2.75 billion raised through a 2014 Eurobond was partly used to retire a costly $604.5 million syndicated loan Kenya had borrowed from commercial banks in 2012.
President Uhuru Kenyatta’s insatiable appetite for loans to fund infrastructure and budget deficits has seen Kenya’s public debt more than double under his reign.
Total debt stood at Sh1.894 trillion or 42 per cent of GDP in June 2013; barely two months after Mr Kenyatta assumed power.