Friday, October 13, 2023 – President William Ruto’s government has disclosed plans to repurchase a quarter of Kenya’s Ksh 298.1 billion Eurobond, set to mature in 2024, before the end of this year.
Speaking to Reuters during the World Bank and International Monetary Fund (IMF) meetings in Marrakech, Central Bank of Kenya (CBK) Governor Kamau Thugge clarified that the Ksh74.4 billion payment would follow the acquisition of new loans, a move aimed at easing concerns that Kenya would default on the loan.
According to Thugge, CBK is actively engaging with two commercial banks to secure loans ranging from Ksh74.4 billion to Ksh149 billion.
He highlighted that part of these funds would be used in the Eurobond buyback, liability management, and the remainder to support the national budget.
Moreover, Thugge revealed ongoing discussions with the IMF to “augment” Kenya’s loan programme, set for review in November.
He also spoke of negotiations with the World Bank for a Ksh111.7 billion cash injection in March 2024.
The governor expressed openness to requesting “exceptional access” from the IMF, which exceeds the typical funding limits.
Exceptional access would allow CBK to ask for more than its limit of IMF funding and if approved, it would be the third increase to the loan programme, which was originally set at Ksh 342.8 billion in 2021.
This comes a few months after the National Treasury declared that they were not keen on the repurchasing plan citing investors’ ‘strong’ confidence in the government’s fiscal policy stance.
Treasury’s statement followed Ruto’s announcement, that same month, on the government’s plan to buyback at least 50 percent of the Eurobond before the end of the year.
Investors were opposed to the idea, divulging that they might view a buyback as a default on the loan.
They explained that redeeming the loan at a price below par value would mean a loss for them.
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