Nairobi Star (Nairobi)
Peter Kiragu
14 December 2011
Kenya has opted to raise close to 54 billion from international banks for budgetary support. Treasury permanent secretary Joseph Kinyua said the government has abandoned plans to issue a Eurobond and will instead seek to directly borrow the cash from foreign banks. Kinyua said all the necessary approvals for the capital raising amounting to Sh54 billion (US$600 million) has been concluded with bids for the same expected to be advertised soon.
The PS said capital raising from the international banks will reduce pressure on the domestic money markets and could also provide favorable interest rates.
The current high local interest rate environment has seen the government reducing its borrowing program for the year which was about 120 billion in the domestic market. “We are not going for a sovereign bond,” Kinyua said on the sidelines of a press conference at Treasury buildings yesterday. “We want to tap into international savings.” Deputy prime minister and finance minister Uhuru Kenyatta said during the budget speech in June that the government will rely on net foreign financing of Sh116.7 billion to partly bridge a deficit of Sh236.2 billion.
Meanwhile the International Monetary Fund has approved close to Sh13 billion under the extended credit facility to shore up Kenya foreign exchange reserves to support the weak shilling. The new disbursement brings the total amount extended to the country to Sh28.1 billion under the three year programme approved early this year. “Program implementation during the first half of 2011 was in line with the objectives of the Extended Credit Facility supported program,” the IMF said in a statement. “The fiscal position at end June was significantly better than expected as a result of strong revenue performance and strict expenditure control.”
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