Kenya will delay accessing a $1.5 billion UAE loan to align with its budget. This strategy is part of its efforts to manage rising debt and negotiate a new IMF program. The country has also issued a $1.5 billion bond to cover upcoming loan maturities while awaiting additional external funding.
Kenya has decided to postpone accessing a $1.5 billion loan from the UAE, as stated by Finance Minister John Mbadi. This decision is strategic, aiming to align with the country’s budget plans for the current financial year. The loan is part of Kenya’s efforts to manage its increasing debt service costs effectively, which have escalated due to extensive borrowing in past years.
The government is currently engaged in negotiations with the International Monetary Fund (IMF) for a new lending program, set to succeed the existing one after its expiration in April. Mbadi emphasized that fiscal discipline is a primary reason for delaying the drawdown of the UAE funds, ensuring it fits within Kenya’s overall fiscal framework.
In addition to the UAE loan, Kenya has successfully raised $1.5 billion through a new 10-year dollar bond to address imminent debt maturities. Further funding exceeding $950 million is expected from other external sources, such as the World Bank and the African Development Bank, by June’s end.
In summary, Kenya is strategically postponing the drawdown of a $1.5 billion loan from the UAE as part of its fiscal management efforts. The government aims to integrate the loan within its budgetary framework and is actively seeking alternative financing sources while negotiating with the IMF. This careful approach reflects Kenya’s commitment to sustainable economic stability amid rising debt challenges.
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