Kenya to Secure $500 Million Syndicated Loan from Trade Bank

Kenya's Cabinet Secretary for National Treasury & Economic Planning Njuguna Ndung'u. PHOTO/COURTESY

Kenya is scheduled to receive a $500 million (Ksh75.0 billion) syndicated loan from the Trade and Development Bank (TDB) in November, as disclosed by a senior official at the National Treasury. The TDB has been entrusted with raising up to $1.0 billion (Ksh150.0 billion) for Kenya in the current fiscal year, with a total external financing projection of Ksh448.7 billion ($2.99 billion), as outlined in the Draft Budget Review and Outlook Paper (BROP) published by the National Treasury on September 15th.

According to the official, “The TDB syndicated loan has been signed, and we are expecting $500.0 million to be disbursed sometime next month.”

The government’s borrowing plan for the fiscal year 2023/24, as detailed in the Draft BROP, involves a recalibration, with domestic borrowing now projected at Ksh415 billion ($2.76 billion), down from the initial Ksh587 billion ($3.9 billion), while external financing is expected to be revised upwards to Ksh448.7 billion from the previous Ksh131.0 billion.

This external financing arrangement through TDB aligns with Treasury Cabinet Secretary Prof Njuguna Ndung’u’s remarks during the annual World Bank and International Monetary Fund (IMF) meetings in Morocco. Ndung’u conveyed that multilateral and development finance institutions would be Kenya’s primary sources of funding ahead of the $2.0 billion (Ksh298.0 billion) Eurobond maturing in June 2024.

He explained, “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.”

Additionally, Kenya has engaged in discussions with the IMF to secure additional financing as a priority item, building on the existing program that has seen the country access $2.1 billion (Ksh312.5 billion) in funding. According to the IMF’s Deputy Director for Africa, Catherine Pattillo, the Kenyan government is actively working with the IMF, World Bank, and other donors to strengthen its economic program while addressing funding requirements through fiscal measures.

The government had recently enlisted the services of Citi Group and Standard Bank to facilitate Kenya’s return to the international capital markets via a Eurobond issuance in anticipation of the maturity of Ksh298 billion ($1.99 billion) in June 2024. However, the Treasury has acknowledged challenges arising from an unfavorable yield environment in executing the planned issuance.

Additional Reporting: Business Daily Africa

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