Kenya is negotiating for a $1.5 billion (Ksh 192.75 billion) loan from the United Arab Emirates (UAE) to help bridge the budget financing gap following IMF Delay.
Kenya is Diversifying it's Budget Support Source's, following the International Monetary Fund's (IMF) delays in disbursing the funding necessary for Budgetary obligations.
The UAE loan will have an interest rate of around 8.2%, lower than the current yields on Kenya’s sovereign bonds.
The East African Country has been struggling to find new sources of financing after demonstrations forced President William Ruto to withdraw the controversial Finance bill 2024 that had targeted additional revenue of more than Ksh346 billion ($2.7 billion) in June.
The IMF was going to approve a disbursement around June 12 but when the Finance Bill got pulled down, they could no longer do it, with the IMF Board jetting into the country to access the Economic Situation before processing any disbursement's.
Kenya has a budget deficit of 4.3% of the gross domestic product for the current fiscal year through June from an initial 3.3% pre-protest budget, potentially breaching IMF-program targets.
After a six-day visit to Kenya, an IMF staff team issued an update on the formation of policies that will manage financial challenges in the country.
According to the IMF, discussions held with the Kenyan government revolved around policies and reforms to address the subsequent evolving economic and fiscal challenges.
To address the funding gap, the Kenyan government plans to secure approximately $2.8 billion ( Ksh 359.8 billion) in foreign loans and borrow $3.2 billion (Ksh 411.2 billion) from the local market.