Kenya turns to borrowing at least $1.05bn to plug widening budget deficit
Nairobi — Kenya is raising at least $1.05bn through syndicated loans, including $250m already secured from lenders led by PTA Bank, as East Africa’s biggest economy seeks to plug a widening budget deficit.
PTA, an East African trade-finance bank based in Burundi, has disbursed $100m, and $150m more would be received "shortly," treasury principal secretary Kamau Thugge said on Wednesday. "We are also syndicating $800m to international banks," he said.
Kenya’s government outlined plans in last year’s budget to raise $1.5bn externally in the year to June. Thugge did not say immediately how the state would raise the remaining $495m. The total to be borrowed "would be consistent with parliamentary approval of external commercial borrowing of 154-billion shillings", he said.
The World Bank has estimated Kenya’s financing gap at 9.6% of GDP in the 2016-17 year, from 7.2% in 2015-16.
The financing will also help the central bank shore up foreign-currency reserves and may stabilise a depreciating currency, said Jibran Qureishi, an economist for East Africa at Stanbic Holdings, in Nairobi.
Kenyan shilling weakened 0.1% to 103.9 against the dollar by 2.28pm in Nairobi. The currency has fallen 1.4% so far this year, according to Bloomberg data.
The remaining $495m could still be raised from multilateral lenders and development finance institutions, Qureishi said.