Government Secures Ksh70B as Loan Demand Skyrockets
Kenya secured a syndicated medium-term loan of Ksh70 billion ($500 million) on Thursday, July 6 to support the government’s development agenda.
Citibank, London Branch, Rand Merchant Bank, a division of FirstRand Bank Limited (RMB), The Standard Bank of South Africa Limited (Standard Bank), Standard Chartered Bank (Standard Chartered), and their respective affiliates arranged for the facility.
The financial institutions announced in a statement that the funds will assist the Kenya Kwanza administration in implementing various development projects.
“The proceeds from the facility will be used by the National Treasury to finance development projects by the development budget approved by the Kenyan Parliament for Fiscal Year 2022/23,” the commercial institutions said.
Before securing the syndicated loan, the Africa Export-Import Bank partnered with the facility to assist in monitoring the administration of President Ruto’s use of the funds.
“The Africa Export-Import Bank joined the facility as book-runner and mandated lead arranger, with its subscriptions allocated to the longer-term tranche,” the statement continued.
A month prior, the World Bank had approved a Ksh138.5 billion loan to assist the country in reducing its debt burden. In a statement dated Tuesday, May 30, the World Bank indicated that the facility will assist Ruto in addressing the weakening of the shilling relative to the U.S. dollar.
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Aghassi Mkrtchyan, a senior economist at the World Bank, has stated that the funds will be allocated via a Development Policy Operations (DPO) instrument.
“The DPO’s support for the government’s reforms will help to achieve fiscal consolidation, which is essential for reducing the debt burden and related risks equitably and sustainably,” the financial institution stated.
The loans were disbursed despite Ruto’s persistent efforts to restructure the global financial architecture. Ruto argued in France that the World Bank and the International Monetary Fund (IMF) should not have exclusive lending authority.
Ruto proposed that creditors adopt a new law allowing nations to repay their maturing debt within a timeframe of 50 years, coupled with a grace period of 10 to 20 years.
From September to December 2022, Ruto received Ksh87.73 billion from the IMF, according to data from the Treasury.
The National Treasury disclosed that the government received Ksh140 billion from the World Bank on May 30 to help fund the budget.
“The total cumulative external disbursements from project loans stood at Ksh170.71 billion as of June 12, 2023.
“By May 19, 2023, Kenya had received a disbursement of Ksh112 billion (USD 800 million) from a syndicated facility,” the statement stated.
Government Secures Ksh70B as Loan Demand Skyrockets
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