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State loan borrowing spree nets Sh227.5 billion in four months

Thursday, February 29th, 2024 11:00 | By
Cabinet Secretary, National Treasury & Economic Planning Njuguna Ndung’u. PHOTO/Print

The Kenya Kwanza government secured loans amounting to Sh227.5 billion in the four months between October 2023 and January this year.

A report by the Treasury tabled in the National Assembly yesterday states that eleven new loans were contracted between the Kenyan government and, multilateral and commercial creditors, at an average of Sh56.7b in each of the four months of October, November and December 2023 and January this year.

Ten of the loans are from multilateral lenders while one is from a commercial lender.

This was the second tranche of loans by President William Ruto’s administration having secured the last one in May last year when it received a syndicated loan of Sh127 billion from a consortium of international lenders.

The Kenya Kwanza government received a disbursement of Sh141 billion from the World Bank two weeks later. In July 2023, the country also secured another syndicated loan of Sh70.55 billion.

“The total value of the 11 new loans signed is equivalent to Sh223,541,581,121. Two of the loans had been disbursed by the time of submitting this report,” reads the report, referring to two loans amounting to Sh4b.

Improvement of urban roads

In October last year, the government secured a loan with the OPEC Fund for International Development for the improvement of urban roads in five counties.

The loan amounts to US$40 million equivalent to Sh 5.8 billion and will be repaid in US dollars.
The loan will be repaid in 29 equal semi-annual repayments of US$ 1,332,000 from October 1, 2028 through to October 1, 2042 and one installment of US$ 1,372,000 on 1st April 2043.

The purpose of the loan according to the Treasury is to support Kenya’s North Eastern region in achieving its full economic potential and improving the socio-economic welfare of its population.

“More specifically, the project shall create new job opportunities because of new transportation possibilities, improved market access, and the possibility of labour migration. The project shall also enhance economic development and boost investment, as a result of the reductions in travel time and costs,” states the report.

A Sh14.2 billion loan will go towards the support of the National Youth Opportunities Towards Advancement Project.

Promote savings

Purpose of the loan is to increase employment, and earnings, and promote savings for Targeted Youth, at a national scale.

The Kenya Green and Resilient Expansion of Energy Programme has received Sh 28.5 billion loaned by the IDA.

The purpose of the loan is to improve the financial viability of the Kenya Power and increase access to electricity.

The Second Program for Strengthening Governance for Enabling Service Delivery and Public Investment in Kenya has been boasted by a Sh36.9 billion from the IDA which will be repaid in 2048.

The purpose for the loan is to enhance revenue mobilization and deepen accountability and transparency of public finance management at the national government level.

The IDA is also financing the Kenya Water Security and Climate Resilience Project with Sh 4.4 billion whose purpose is to increase access to irrigation water for project beneficiaries, enhance the institutional framework, and strengthen capacity for water security and climate resilience in certain areas of the territory of the recipient.

The Kenya Green and Resilient Expansion of Energy Programme has been boasted with Sh28.6 billion which will be used to improve the financial viability of KPLC and increase access to electricity.

To increase employment, and earnings, and promote savings for targeted youth, at the national level, the National Youth Opportunities Towards Advancement Project, the government secured Sh14.3 billion.

Strengthen capacities

The Second Kenya Urban Support Program has received Sh21.4 billion from IDA to strengthen the capacities of urban institutions to, improve the delivery and resilience of urban infrastructure and services, enhance the private sector engagement in urban planning; and support the transition of refugee camps into integrated host community and refugee settlements.

The government has secured Sh21.4 billion to finance the second Kenya Urban Support Program also from IDA, which will be used to strengthen the capacities of urban institutions. The money will also be used to improve the delivery and resilience of urban infrastructure and services and enhance the private sector engagement in urban planning.

The country also entered into a Sh 30.6 billion Syndicated Term Loan Facility signed between Eastern and Southern African Trade and Development Bank.

The purpose for the loan is to fund the development projects; refinancing or repurchasing of Eurobonds issued by the borrower; and payment of any fees, costs, and expenses in connection with the finance documents.

The Health Emergency Preparedness, Response, and Resilience Programme will benefit from a Sh 17 billion signed last month between the government had the IDA. The money will be used to strengthen health system resilience and multisectoral preparedness and response to Health Emergencies in Kenya.

Immediately after assuming power, the Kenya Kwanza administration contracted eight loans worth Sh43.4 billion in the four months between September 1 to December 31, 2022.

According to the Treasury the new loans signed between the government, and commercial bilateral and multilateral creditors will be repaid between 2030 to 2047. President Ruto’s government is counting on concessional loans to retire the short-term expensive loans that have worsened Kenya’s cost of servicing debt.

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