Treasury Cabinet Secretary Ukur Yatani has announced that Kenya cancelled the sale of a Sh115 billion Eurobond in 2022.
The government has opted out of the bond whose primary underwriters had been picked as Citi Bank and JP Morgan.
According to the Treasury, the rising exchange rates indicated that the debt would have been very costly for the country.
“In our funding for this financial year, we factored in borrowing from the international market, the Eurobond. But we realised as a result of challenges in Russia and Ukraine the cost of borrowing has gone really high,” said CS Yatani.
“Last year we borrowed at 6%, right now it stands over 12% and this is no longer feasible. That is why we are still exploring options to look at a number of banks that can advance us the money at a cheaper rate, a figure more or less than a figure of last year, an average of 6%,” he added.
The government will instead turn to local borrowing and syndicated loans to help alleviate the cash crunch.
Syndicated loans were last issued in 2019 by former Treasury CS Henry Rotich before the government shifted its borrowing policy away from commercial banks.
This comes after the National Assembly approved a proposal to increase Kenya’s debt ceiling to Sh10 trillion.
This will allow the next government to borrow Sh846 billion to plug the budget deficit in the fiscal year starting July 1.
In October 2019, parliament increased the debt cap from Sh6 trillion to Sh9 trillion. As of September 2021, Kenya’s debt according to Parliamentary Budget Office stood at Sh7.99 trillion.
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