Kenya is in talks with the African Development Bank for about $80.6 million to plug its budget gap this fiscal year after slashing its domestic borrowing target in favor of foreign concessional debt.
(Bloomberg) — Kenya is in talks with the African Development Bank for about $80.6 million to plug its budget gap this fiscal year after slashing its domestic borrowing target in favor of foreign concessional debt.
The financing is awaiting AfDB board approval and the program’s targeted reform areas are still under discussion, the Abidjan-based lender said in an emailed response to questions.
Kenya is separately discussing some World Bank budget support under the so-called development policy operation, the Washington-based lender said. If concluded, it would be the sixth time the East African nation is tapping the facility, having taken $4.25 billion since 2019.
“Priority areas, specifics and the timeline for the next program are still under discussion,” the World Bank said in an emailed response to questions.
Central bank Governor Kamau Thugge said earlier this month Kenya is reducing this fiscal year’s net domestic loan target by 46% to 316 billion shillings ($2.2 billion). Net foreign financing will in turn more than triple to 464.2 billion shillings.
Read More: Kenya Dollar Bonds Jump as World Bank Loan Eases Debt Concerns
East Africa’s second-biggest economy, whose debt is seen at high risk of distress, is turning to bilateral and multilateral institutions as part of a strategy to address those vulnerabilities as interest rates at home keep climbing.
On Tuesday the central bank offered a 16.844% coupon for bonds due in July 2028. The central bank has increased its benchmark interest rate by a total 175 basis points this year.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.