Kenya is set to receive $500.0 million (Sh75.0 billion) in November from a syndicated loan arranged by the Trade and Development Bank (TDB), a top official at the National Treasury has revealed.
The Business Daily has learned that TDB has been mandated to mobilise up to $1.0 billion, Sh150.0 billion, for Kenya in the current financial year whose total external financing is projected at Sh448.7 billion according to the Draft Budget Review and Outlook Paper (BROP) published by the National Treasury on September 15th.
“The TDB syndicated loan has been signed. We are expecting $500.0 million to be disbursed sometime next month,” the official said.
Through the Draft BROP, the government seeks to recalibrate the borrowing plan for the financial year 2023/24 with domestic borrowing now projected at Sh415.0 billion down from the earlier Sh587.0 billion while external financing is set for an upward revision to Sh448.7 billion from the earlier Sh131.0 billion.
Tapping into external financing arranged by TDB, a development finance institution, aligns with comments made by Treasury Cabinet Secretary, Prof Njuguna Ndung’u, on the sidelines of the just concluded annual World Bank and International Monetary Fund (IMF) meetings in Morocco.
Ndung’u told investors from Japanese multinational, Sumimoto Mitsui Banking Corporation, that multilateral and development finance institutions will top Kenya’s funding sources ahead of the US$2.0 billion, Sh298.0 billion, Eurobond maturing in June 2024.
“Our strategy is simple. What we are trying to do is to align resources from multilateral development banks, that’s IMF and the World Bank; the bilaterals like friendly countries which we have been working with like Japan; and then DFIs (Development Finance Institutions) in terms of what kind of resources we can align first to reduce our exposure with the Eurobond,” CS Ndung’u told investors on the sidelines of the annual meetings.
The IMF has recently revealed that the government has opened talks with the fund for additional financing to augment its existing programme through which Kenya has so far tapped $2.1 billion, Sh312.5 billion.
IMF’s Deputy Director for Africa, Catherine Pattillo, told the Business Daily in an interview that the request for additional finance and the amount being sought by the Kenyan Government was a priority item in the mission which was earmarked to take place last week.
“For Kenya, the authorities are steadfastly addressing this and collaborating with us in the IMF, the World Bank and other donors to further strengthen their economic programme which they have been very much committed to and they are working to secure additional funding while implementing fiscal measures to address some of the funding requirements,” Pattillo says.
The government recently onboarded Citi Group and Standard Bank to arrange for Kenya’s return to the international capital markets through a Eurobond issuance ahead of the Sh298.0 billion maturity expected in June 2024.
The Treasury has, however, since indicated that an unfavourable yield environment presents challenges in the planned issuance.
