- Treasury CS John Mbadi disclosed that Kenya will receive $500 million (KSh 64.8 billion) next week as the current financial year draws close
- Nairobi opted to secure a loan from the United Arab Emirates after its programme with the International Monetary Fund ended
- As Ruto’s administration continues to obtain loans, Kenya’s debt soared to KSh 11.02 trillion as of January 2025
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TUKO.co.ke: Japhet Ruto, a journalist at TUKO.co.ke, brings more than eight years of expertise in finance, business, and technology journalism in Kenya and globally.
National Treasury Cabinet Secretary (CS) John Mbadi has announced that the United Arab Emirates (UAE) will disburse the first instalment of a $1.5 billion (KSh 194.6 billion) loan to Kenya.
When’s the first instalment of UAE loan?
Mbadi revealed that Nairobi will receive $500 million (KSh 64.8 billion) next week, a month before the end of the 2024/2025 financial year.
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The CS disclosed that Treasury had the option to draw $1 billion (KSh 129.5 billion), but chose to take half, with the remaining amount set to be taken in the next fiscal year.
“For the UAE, the KSh 64.8 billion will hit our accounts, latest next week. We have completed all the processes, renegotiated and signed it,” Business Daily quoted the CS.
However, Mbadi pointed out that the government could opt for the full amount if the exchequer faces a big deficit.
“We are starting with $500 million, but the maximum we can take this year is $1 billion. We can go for the $1 billion if we feel the pressure to meet our external financing,” he added.
Why Kenya opted for UAE
President William Ruto’s administration aimed to expand its external financing alternatives after the four-year International Monetary Fund (IMF) programme came to an end.
Last year, it arranged a seven-year UAE loan at an interest rate of 8.25%.
Besides hindering the government’s capacity to boost its regular revenue, widespread protests over increased taxes in June 2024 also forced an increase in the national budget’s debt-funded component.
By the conclusion of the fiscal year, the aggregate anticipated inflows from fresh external loans will reach $1.37 billion (KSh 177.5 billion) thanks to the drawing of the UAE bond.
Mbadi informed lawmakers on April 16 that the government will be securing loans from the World Bank and the African Development Bank (AfDB) totalling $865 million (KSh 112 billion).
What is Kenya’s debt?
As Ruto’s administration continues to obtain loans, Kenya’s debt soared to KSh 11.02 trillion as of January 2025.
External debt stood at KSh 5.09 trillion, with multilateral loans taking the biggest chunk, while the domestic debt rose to KSh 5.93 trillion.
The state accumulated KSh 0.86 trillion (14.4%) in Treasury bills and KSh 4.93 trillion (83.3%) in Treasury bonds in the domestic market.
The government is set to borrow over KSh 600 billion to fund the extension of the Standard Gauge Railway (SGR) from Naivasha to Malaba.
Source: TUKO.co.ke
