The National Treasury has secured Ksh 70 billion ($500m) through a syndicated loan organized by a consortium of five international lenders.
This is part of the Ksh 84 billion ($600m) that Kenya was seeking in the international market to finance various projects in the 2022/2023 budget.
A statement by the five lenders has not disclosed the interest the three and five-year loans will attract.
Treasury plans to borrow Ksh 200 billion from the international market in the fiscal year 2023/24 to repay maturing debts and fund stalled projects, especially in the transport sector.
The funds are expected to ease the cash flow crisis and boost the country’s dwindling foreign exchange reserves which have taken a hit from the weakening shilling.
Treasury coffers are cash-strained amid debt maturity pressure coupled with highly ballooned debt-servicing costs in recent years and is considering a raft of interventions including going for another Eurobond to help deal with the situation.
In March this year, Kenya approached four international lenders namely, Standard Chartered Bank of the UK, US-based CitiGroup, and South African lenders Standard Bank and Rand Merchant Bank to arrange a Ksh 84 billion facility.
However, the markets have been unfavorable due to dollar pressure and the ongoing commodity market crisis that has made international financial markets volatile.
In the current financial year, Kenya is tapping Ksh 405 billion loan at the Africa Export and Import Bank whose cost will vary depending on the purpose of every withdrawn portion during the three years that the facility will be active.
Expert says the trade financing route is expected to be cheaper than the concessional loan withdrawals since the bank will only factor in the commissions for every project supported.