Kenya to Borrow $600 Million From Bilateral Creditor, IMF Says

  • Nation took out $750 million facility in November at about 8%
  • Treasury cut back domestic borrowing on high interest rates

Kenya’s government plans to borrow $600 million from a bilateral creditor this year in addition to a $750 million loan it took at the end of 2015 when the cost of domestic credit became expensive, the International Monetary Fund said.

East Africa’s biggest economy expects to cut domestic loans by as much as a quarter to 170 billion shillings ($1.7 billion) from the 221 billion shillings it had originally budgeted, Treasury Secretary Henry Rotich told lawmakers on Monday.

In November, the Treasury took out a two-year $750 million syndicated facility at about 8 percent effective cost, the IMF said Tuesday in an e-mailed statement.

Kenya has said it may offer more Eurobonds after selling $2.82 billion bonds in 2014 in its debut on international markets. The government is also working on regulations needed to issue Islamic bonds and the Treasury has mooted yen-denominated Samurai securities.

Kenya proposes to reduce its net spending in the current fiscal year ending June 31 after its revenue fell short of targets and domestic interest rates shot up when the central bank raised its benchmark rate to support the shilling, according to a supplementary budget presented to parliament this week. The total budget, however, will go up by 2.3 percent, reflecting donor funding for development projects.

The IMF expects Kenya’s gross domestic product to expand by 6 percent this year, slower than the 6.8 percent it had earlier projected, with volatile capital flows presenting the strongest risk to growth. The $55 billion economy grew an estimated 5.6 percent in 2015.

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