Kenya confident about repaying $2 billion international bond

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Kenya will be able to repay a $2 billion international bond set to mature in June, according to the country’s central bank governor, Kamau Thugge.

  • The repayment is expected to address concerns about Kenya’s mounting debt, currency depreciation, and financial market access.
  • Funds from the World Bank, various multilateral institutions, and regional banks is expected to fulfill the bond repayment.
  • Kenya is also exploring a potential debt swap strategy to strengthen its financial position ahead of the critical repayment deadline.

The repayment is expected to contribute to the recovery of the shilling from its historic lows, addressing concerns about Kenya’s mounting debt, currency depreciation, and financial market access, Reuters reported.

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Thugge said that funds from the World Bank, various multilateral institutions, and regional banks would be enough to fulfill the bond repayment.

Last month, the east Africa country secured $684.7 million loan from IMF ahead of Eurobond deadline. Kenya is also exploring a potential debt swap strategy to strengthen its financial position ahead of the critical repayment deadline.

What the governor said:

“This risk of the Eurobond will in my view be completely eliminated. And that should also contribute to a strengthening of the shilling,” he told reporters.

“It is my view now that the exchange rate has overshot the equilibrium rate. So there could be scope for central bank to support the exchange rate going forward,” Thugge said.

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The central bank of Kenya has previously stressed its lack of a preferred exchange rate for the shilling, intervening solely to mitigate volatility. Governor Kamau Thugge noted that the shilling might find support from inflows provided by overseas lenders and increased interest rates.

Kenya has received disbursements totalling just over $1 billion in the last two months and expects to get another $1.5 billion from the World Bank between March and May, he said.

He added that the economy was forecast to grow 5.7% this year versus 5.6% last year. In December, the central bank predicted growth in 2024 of 5.9%.

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