According to an International Monetary Fund (IMF) report, Kenya will take out syndicated loans totalling Sh110. 7 billion by the end of June to support its budget and replenish its depleting dollar reserves.
As the nation changes its stance against borrowing from commercial banks, the Treasury has agreed to the terms for Sh36. 9 billion of the $900 million (Sh110.7 billion).
Kenya was forced to abandon plans to issue its fifth Eurobond worth about $1.1 billion (Sh135. 3 billion) due to market volatility that caused yields on external bonds to increase, depriving the country of much-needed foreign exchange reserves at a time when the country is experiencing a dollar shortage.
The total value of Kenya’s existing Eurobonds increased by Sh57. 5 billion despite no new ones being issued. The failure by Kenya to get external commercial financing has contributed to the drop in Kenya’s foreign exchange reserves (forex) to below four months of import cover, one of the reasons Fitch, a global rating agency, downgraded Kenya’s credit score from B+ to B.READ: Fitch downgrades Kenya’s rating on elevated debt repayment.
The downgrade is due to elevated debt repayment obligations in the upcoming financial year including the maturity of a $2 billion (Sh245. 6 billion) Eurobond in June 2024 amid high financing costs in the international market.