The Central Bank of Kenya's weekly bulletin on Friday showed the country's forex reserve stood at $7.997 billion (Sh946 billion) compared to $7.982 billion (Sh943.8) billion a week earlier.
Despite the slight increase, there was however a contraction in import cover to 4.61 months from 4.74 months, illustrating the effect of a rising import bill over recent months.
The slight improvement did not however cushion the weakening shilling, falling further to 118.20 against the greenback.
The situation is expected to worsen in the coming weeks as the country settles external debts including those taken for the construction of SGR and Eurobonds.
Data from the National Treasury shows the country is supposed to pay at least Sh35 billion by next Monday for the three loans borrowed to construct SGR lines in 2014 and 2015.
The two loans for the Mombasa-Nairobi phase of the SGR which stood at $1.6 billion (Sh188 billion) and $2 billion (Sh236 billion) respectively were signed in May 2014 and had a grace period of seven and five years respectively.
All these are to be repaid semi-annually in January and July, with the interest rate calculated above the six-month London Interbank Offered Rate (Libor) rate currently at 2.9 per cent.
Libor is the benchmark interest rate at which major global banks lend to one another in the international inter-bank market for short-term loans.
The two loans for the Mombasa-Nairobi phase, the $1.6 billion and $2 billion, are to be repaid in 13 and 10 years respectively while that for the Nairobi-Naivasha phase of the SGR has 15-year tenure.
SGR loans form a huge part of Kenya's external debt at almost 10 per cent and account for 20 per cent of the total external debt which was Sh4.24 trillion by end of May.
This makes China the largest bilateral lender to Kenya, with an outstanding debt stock of $6,885 million (Sh827 billion) by end of May this year.
Kenya restructured close to Sh28 billion of Chinese loans in the last financial year as part of a debt relief measure aimed at cushioning the country from the adverse effects of Covid-19.
In the current financial year, Kenya is expected to repay China close to Sh108 billion.
Debt payment is part of the government's first charge, meaning, the exchequer is also expected to clear other maturing local and international obligations, piling more pressure on the elusive forex.
This comes at a time Kenya is grappling with a dollar shortage aggravated by a sharp rise in the cost of inputs in the global market, following the Russia-Ukraine war and increased outflows by foreign investors at the Nairobi Securities Exchange (NSE).
Yesterday, the shilling traded at 118.24 against the US dollar, having dropped further compared to118.18 on Friday.
''External debt repayments due in coming weeks will put more pressure on the shilling, sending it to a new record low of 118.50 by Friday. This is likely to worsen the already high cost of living,'' economist Dan Maloba told the Star on phone.
He added that the only salvation would have been the delayed IMF funds approved in April.
With reduced earnings from tourism and exports, IMF's $244 million approved on April 25 could have been the saving grace but has been delayed pending executive board meeting,'' Maloba said.
The international lender approved 38-month arrangements under the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF) for Kenya amounting to $2.34 billion in April last year.
