Kenya will postpone drawing from a $1.5 billion UAE loan to align with its budget plans. The country is managing high debt service costs and currently negotiating a new lending program with the IMF. Finance Minister Mbadi outlined that the country recently secured $1.5 billion from a 10-year bond and anticipates additional funds from international sources, while the UAE loan is structured for repayment in installments over several years.
Kenya will defer accessing a $1.5 billion loan from the United Arab Emirates until it aligns with the government’s financial plans for the current fiscal year, according to Finance Minister John Mbadi. The country faces increased debt service costs and is actively seeking ways to stabilize its finances. Negotiations for a new lending program with the International Monetary Fund (IMF) are also in progress ahead of the expiration of the current agreement in April.
The East African nation has recently raised $1.5 billion through a new 10-year dollar bond, aimed at managing upcoming debt maturities. By June’s conclusion, the government anticipates receiving over $950 million from various external sources, including institutions like the World Bank and the African Development Bank, in addition to Germany and Italy.
Finance Minister Mbadi indicated that the delay in drawing from the UAE loan is to ascertain the extent of any remaining budget deficit after accounting for external financing. President William Ruto’s administration has sought improved trade relations with the UAE since he assumed office in October 2022.
The loan, arranged last year, bears an interest rate of 8.25% and is structured for repayment through installments of $500 million due in 2032, 2034, and 2036. Mbadi clarified that the funds could be used for either management of liabilities, budgetary support, or exclusively for budgetary purposes.
In conclusion, Kenya’s strategic delay in accessing the $1.5 billion UAE loan is intended to ensure alignment with its fiscal objectives amidst rising debt costs. The government is also exploring other financing sources and lending from international institutions, demonstrating a calculated approach to managing its financial obligations as it navigates upcoming fiscal challenges.
Original Source: eastleighvoice.co.ke
