Kenya taps Sh354bn in 18 external loans in year ended June
The National Treasury Building in Nairobi. Kenya’s external debt has grown to a record Sh5.71 trillion by June
Kenya signed 18 loans with various external lenders in the financial year 2022/23 allowing the country to access Sh345.89 billion to support budgetary spending and fund specific projects.
National Treasury data shows that six of the loans were signed with bilateral lenders, four from commercial lenders, and eight from multilateral lenders. The funding is Sh65.16 billion more than the Sh280.73 billion that the Treasury had planned to borrow during the financial year.
“This is consistent with the MTDS (medium-term debt strategy) approach to minimise commercial borrowing and maximize the use of concessional funds. The 18 external loans had a net value of Sh345.89 billion,” said the Treasury.
Four of the loans were tapped from the World Bank’s International Development Association including Sh16.39 billion for the Eastern Africa Regional Statistics Programme for Results and Sh18.61 billion for the Horn of Africa – Groundwater Resilience Project.
The other two loans Sh25.99 billion and Sh44.26 billion were part of the World Bank’s Fiscal Sustainability and Inclusive Green Growth Development Policy Operation.
The Treasury also borrowed Sh13.61 billion from the African Development Bank (AfDB) for the Competitiveness and Economic Recovery Support Programme and Sh4.2 billion for support to the micro small and medium enterprises sector programme from the Khalifa Fund for Enterprise Development.
One of the four commercial loans the country took was a Sh42.15 billion syndicated short-term multicurrency facility for budgetary support from the Trade and Development Bank and a Sh2.96 billion commercial loan from Mizubo Bank Europe N.V for the Upgrading Maternal and Newborn Care Units Project.
The other commercial loans were a Sh41.81 billion loan from the Afrexim Bank and Sh28.1 billion from the Standard Bank of South Africa.
Kenya also signed four bilateral loans from the Federal Republic of Germany including Sh2.75 billion for Support to Waste Water Management at Lake Victoria South and Sh3.96 billion for Programme for Promotion of Entrepreneurship and Employment.
It also includes Sh6.88 billion for the Olkaria I & IV upgrading geothermal project and Sh4.74 billion for Food Security and Youth Employment in Western Kenya through Local Climate Resilience..
The single largest loan tapped by the Treasury during the financial year was a multilateral loan of Sh70.26 billion from the International Bank for Reconstruction & Development.
It also received Sh9.63 billion from AfDB for the African Emergency Food Production Facility, Sh6.88 billion from Agence Francaise de Development for the Second Kenya Informal Settlements Improvement Project , and Sh2.61 billion from the African Development Fund.
Kenya’s external debt has grown to a record Sh5.71 trillion by June, which is ballooned by the rapid depreciation of the Kenyan shilling against major world currencies.
The Treasury has projected to borrow Sh449 billion in external loans in the current financial year that ends June 2024 to mirror the improved prospects for greater external loans.
The expected higher inflows from foreign creditors saw the exchequer cut the domestic borrowing target by Sh172 billion for the fiscal year 2023/24, which is albeit lower than the previously projected Sh270 billion.
