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

Gulf Times Business - - BUSINESS -

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.

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