The National Treasury contracted Sh258 billion ($1.611 billion) in foreign loans in the seven months to end of January 2024.
The bulk of the external loans in the 2023/24 financial year covers Sh118.8 billion ($742 million) in programme loans which are sourced largely on concessional terms from multilateral lenders.
Among the funding from the lenders is a Sh61.6 billion ($385 million) disbursement from the Trade and Development Bank (TDB) which was approved in January.
Kenya has meanwhile received Sh74.9 billion ($468 million) in project loans over the same period.
Receipts from external capital markets and commercial loan financing have trailed both project and programme loans as the exchequer prioritises tapping mostly from concessional funding sources.
“Kenya believes it has access to adequate concessional and non-concessional financing and reserves buffer to finance both fiscal and balance of payment gaps, while a robust domestic securities market provides further flexibility,” a preliminary offering circular detailing Kenya’s next Eurobond offer notes.
The cumulative disbursements of foreign loans as of the end of January 2024 represent 42.5 percent of total net foreign financing expected by the close of June or Sh606.9 billion ($3.789 billion).
The National Treasury is expected to lean on additional concessional funds to meet its external borrowing target in the fiscal year.
Kenya, for instance, expects the disbursement of Sh15.1 billion (€88 million) from the African Development Bank and Sh240.2 billion ($1.5 billion) from the World Bank Development Policy Operations.
In January, the exchequer netted Sh109.6 billion ($684.7 million) from the International Monetary Fund (IMF), bolstering funding amidst the looming rollover of its 2014 Eurobond which has presented major concerns for investors, driving up interest rates on government securities both in the home market and abroad.
The switch to concessional funding is expected to reduce Kenya’s debt service costs while the multilateral facilities offer relatively longer repayment cycles.
The National Treasury could, however, potentially take up to Sh160.1 billion ($1 billion) representing surpluses from the issuance of the new Eurobond whose proceeds are mainly targeted at rolling over part or portions of Kenya’s debut 2014 Eurobond.
Kenya is expected to make the payment of Sh608.6 billion ($3.8 billion) as principal including the rollover of the Sh320.2 billion ($2 billion) debut Eurobond.
