Serrari Group

Kenya is proactively tackling its financial challenges, with a specific focus on venturing into international bond markets. The impending maturation of a $2 billion Eurobond in June has intensified global interest, fueled by concerns over dwindling hard currency reserves, a significant currency depreciation, and revenue limitations.

While the International Monetary Fund (IMF) raises red flags about Kenya’s high risk of debt distress, Haimanot Teferra, the IMF mission chief for Kenya, remains confident. Teferra asserts that a default on the Eurobond payment is unlikely, emphasizing Kenya’s ability to navigate looming liquidity pressures successfully.

Taking preemptive measures, the Kenyan government secured international lead managers and counsels in September 2023, positioning itself to tap into the international bond market at an opportune time.

Recognizing the urgency for liquidity, Kenya is in talks with the World Bank to boost budget support. Simultaneously, alternative financing sources are being explored through multilateral and bilateral lenders, including negotiations for a syndicated loan led by the regional Trade Development Bank—talks are nearing completion.

Despite recent IMF approval of a $941 million lending package, the report remains cautious about Kenya’s access to reasonably priced commercial debt. Kenya’s public debt is estimated at 73 percent of GDP by the end of 2023, with debt service consuming 55 percent of revenues.

Amidst these challenges, Kenya grapples with rising social discontent, primarily fueled by the escalating cost of living. The nation’s resilient efforts to secure financing from diverse sources underscore its commitment to weathering the financial storm and maintaining economic stability globally.

By: Montel Kamau
Serrari Financial Analyst
18th January, 2024

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