Kenya to roll over $760mn syndicated loan, cut budget deficit

Kenya is in talks with lenders to roll over a $760mn syndicated loan this fiscal year and lengthen its maturity in order to make debt repayments more manageable, a senior Treasury official said yesterday.

The loan, which was initially for two years, was arranged by TDB bank, said Kamau Thugge, the principal secretary at the ministry of finance.

The government aimed to increase the tenor of the loan to seven or 10 years, he said, adding that they had not yet struck an agreement with lenders whom he did not identify.

“We will be going back to the international market to lengthen the maturities of the debts that are falling due.

It does not increase our debt,” Thugge told reporters.

“It is just a rolling over of the syndicated loan. We are just rolling it over. There is no new debt.”

The government was how- ever considering issuing a new Eurobond at a later date, part of efforts to raise 272bn shillings in net external financing which is contained in this year’s budget.

“(That is) the one that we think is going to be the least costly and the one that we think we will be able to complete within this financial year,” Thugge said, without giving more details on the amount or tenor.

The East African nation’s government has ramped up borrowing and spending recently, leaving it with a fiscal deficit that peaked at 7% in the fiscal year ending in June, 2018.

Earlier, Thugge said in a presentation that the 2019-20 (July-June) budget deficit was expected to fall to 4.7% of the gross domestic product from a revised 5.8% this fiscal year.

The deficit was likely to drop to 2.8% of GDP by the 2022-23 fiscal year, he said at a public hearing on the budget.

The government was likely to spend 2.81tn shillings ($27.40bn) in the next fiscal year, up from a revised 2.47tn shillings in this financial year, the official said.