Kenya is in talks with lenders to roll over a $760 million (Sh78.04 billion) syndicated loan this fiscal year and lengthen its maturity in order to make debt repayments more manageable, a senior Treasury official said yesterday.
The loan, which was initially for two years, was arranged by TDB bank, said Kamau Thugge, the principal secretary at the ministry of finance.
The government aimed to increase the tenor of the loan to seven or 10 years, he said, adding that they had not yet struck an agreement with lenders whom he did not identify.
“We will be going back to the international market to lengthen the maturities of the debts that are falling due. It does not increase our debt,” Thugge told reporters.
“It is just a rolling over of the syndicated loan. We are just rolling it over. There is no new debt.”
The government was however considering issuing a new Eurobond at a later date, part of efforts to raise Sh272 billion in net external financing which is contained in this year’s budget.
“(That is) the one that we think is going to be the least costly and the one that we think we will be able to complete within this financial year,” Thugge said, without giving more details on the amount or tenor.
The government has ramped up borrowing and spending recently, leaving it with a fiscal deficit that peaked at 7 per cent in the fiscal year ending in June, 2018.
Earlier, Thugge said in a presentation that the 2019-20 (July-June) budget deficit was expected to fall to 4.7 per cent of the gross domestic product from a revised 5.8 per cent this fiscal year.
The deficit was likely to drop to 2.8 per cent of GDP by the 2022-23 fiscal year, he said at a public hearing on the budget.
The government was likely to spend Sh2.81 trillion ($27.40 billion) in the next fiscal year, up from a revised Sh2.47 trillion in this financial year, the official said.
In October, the International Monetary Fund said Kenya’s risk of defaulting on debt repayments had increased to moderate from low, citing the government’s public investment drive and revenue shortfalls in recent years.
The National Treasury says the economy is expected to grow 6.2 per cent in 2019, up from a forecast 6.0 per cent this year.