Ruto Begs World Bank and IMF for More Loans to Pay Eurobond

Central Bank of Kenya Governor Kamau Thugge has revealed that the government, led by President William Ruto, is in talks with international financiers to faciltate the settlement of a Ksh297.2 billion (2 billion USD) Eurobond.

Speaking during a press briefing on Thursday, October 5, Thugge stated that the government was engaging the International Monetary Fund (IMF) and the World Bank to get additional loans. 

Further, he stated that the loan was due for maturity in June 2024 and therefore the government intended to pay it back before the deadline.

He also noted that the government, was ready to use the existing foreign exchange reserves to progressively pay back the loan. 

“Currently the market conditions are not favorable for refinancing the Eurobond and therefore we have been engaging our lead advisors on how to address the issue of 2024 Eurobond,” Thugge stated.

“We have looked at several options. We are talking with multilateral institutions, with the World Bank and IMF to see how much additional resources they can make available to us.”

Also Read: Government Eyes Return to Eurobond Markets To Avert Liquidity Crisis

Will the Govt be able to Pay Back the Eurobond?

According to the CBK governor, the government is confident that it will be able to progressively reduce the liability of the Eurobond.

He also noted that besides IMF and World bank, the government was also reaching out to the regional development institutions to seek more resources.

“Additionally, we are speaking with the regional development institutions to see how much additional resources will become available.

“We do expect that between now and June that we will progressively reduce the liability of the Eurobond so that by the end of June, if necessary, we will be able to use our international reserves to pay the Eurobond,” added Thugge.

Also Read: National Treasury Raises KSh13.6B From Bond, Report Shows

Ruto on Paying back the Eurobond 

Earlier in June 2023, President William Ruto announced that Kenya would buy back half of the Ksh297 billion Eurobond a year before its maturity date to reduce external debt. 

Kenya’s commercial debt is mostly comprised of Eurobonds and syndicated loans, accounting for around 26 percent of external public debt by the end of 2020.

Eurobonds account for 70% of Kenya’s commercial debt KSh906,7 billion ($6.1 billion), while syndicated loans account for 27% Ksh371,6 billion (about $2.5 billion).

The borrowing has increased Kenya’s total debt to Ksh7.4 trillion, equivalent to 69 percent of GDP, up from 48.6 percent in 2015, prompting concerns about its sustainability.