Kenya central banker sees US$1bn China loan soon

NAIROBI-KENYA is likely to get a fresh US$1 billion loan from China in this financial year and it could use the cash to partly settle a Eurobond that is maturing next June, if it comes in time, the governor of the central bank said on Wednesday.

The loan was first announced by Kenyan authorities in October, marking a shift in the government of President William Ruto’s stance on Chinese lending, after criticising the loans during last year’s election campaign.

“The National Treasury is engaged with the Chinese government,” Kamau Thugge, the central banker, told a press conference.

“The timing is yet to be ascertained. Were we to get it before June 2024, it could be used to address the maturity of the Eurobond.”

Sovereign bond investors have been watching closely to see how the East African nation will handle the maturing US$2 billion hard currency bond.

It struck a staff agreement with the International Monetary Fund last month, which increased the amount it can access under its current borrowing programme with the Washington-based fund.

It plans to use the external financing, including expected disbursements from the World Bank and the regional Trade and Development Bank, to pay the bondholders. Advertisement Policymakers are prepared to take “stronger action” to ensure the foreign exchange rate has stabilised, Thugge said, a day after the Monetary Policy Committee unexpectedly raised the benchmark lending rate by 2 percentage points.

“A shilling that continues to depreciate almost in a straight line does not indicate macroeconomic stability,” he said, referring to the currency.