Kenya secures $500m Trade Bank syndicated loan

A high-ranking official at the National Treasury has disclosed that Kenya will obtain $500 million (Ksh75.0 billion) in November through a syndicated loan facilitated by the Trade and Development Bank (TDB).

TDB has been mandated to mobilise up to $1.0 billion (Ksh150.0 billion) for Kenya in the current financial year whose total external financing is projected at Ksh448.7 billion ($2.99 billion) according to the Draft Budget Review and Outlook Paper (BROP).

“The TDB syndicated loan has been signed. We are expecting $500.0 million to be disbursed sometime next month,” the official said.

The government aims to adjust its borrowing plan for the 2023/24 fiscal year via the Draft BROP. It now anticipates domestic borrowing to be Ksh415 billion ($2.76 billion), down from the previous Ksh587 billion ($3.9 billion), and external financing to increase to Ksh448.7 billion from the previous Ksh131.0 billion.

The decision to access external financing through TDB, a development finance institution, corresponds with statements made by Treasury Cabinet Secretary, Prof Njuguna Ndung’u during the recent annual World Bank and International Monetary Fund (IMF) meetings in Morocco.

Ndung’u told investors from Japanese multinational, Sumimoto Mitsui Banking Corporation, that multilateral and development finance institutions will top Kenya’s funding sources ahead of the $2.0 billion (Ksh298.0 billion) Eurobond maturing in June 2024.

“Our strategy is simple. What we are trying to do is to align resources from multilateral development banks, that’s IMF and the World Bank; the bilaterals like friendly countries which we have been working with like Japan; and then DFIs (Development Finance Institutions) in terms of what kind of resources we can align first to reduce our exposure with the Eurobond,” CS Ndung’u told investors on the sidelines of the annual meetings.

The IMF has announced that the government is in discussions with the fund to secure additional financing, supplementing the current program from which Kenya has already accessed $2.1 billion (Ksh312.5 billion).

IMF’s Deputy Director for Africa Catherine Pattillo indicates that the request for additional finance and the amount being sought by the Kenyan Government was a priority item in the mission which was earmarked to take place last week.

“For Kenya, the authorities are steadfastly addressing this and collaborating with us in the IMF, the World Bank and other donors to further strengthen their economic programme which they have been very much committed to and they are working to secure additional funding while implementing fiscal measures to address some of the funding requirements,” he said.