The World Bank said on Tuesday it approved a $1 billion loan to Kenya to support its budget as East Africa's economic powerhouse confronts high debts and a weakening currency, Reuters reported. The lending will be done through an instrument called a Development Policy Operations (DPO) loan, which commits Kenya to instituting reforms aimed at creating fiscal space, improving agricultural competitiveness and improving governance.
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The International Monetary Fund’s chief capped a visit to Kenya with an enthusiastic endorsement of its economic management and expressed confidence that the cash-strapped nation would keep servicing its debts, Bloomberg News reported. Kristalina Georgieva said that in the IMF’s assessment, Kenya’s debt is sustainable and the administration of President William Ruto is moving swiftly to improve its fiscal position. The remarks come at a sensitive time for the East African nation, with some investors dumping its bonds and questioning its ability to make a $2 billion payment next year.
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Kenya's central bank held its benchmark lending rate steady at 8.75% on Monday, its monetary policy committee said, saying its last hike in November was still working its way through the economy, Reuters reported. Six out of nine market participants polled by Reuters had predicted the bank would hold the rate steady, while three expected it would be raised. The move bucks the trend among major African central banks who have maintained a tightening stance into this year. Policymakers in Nigeria and South Africa hiked rates last week, while their Ghanaian counterparts hiked earlier on Monday.
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Kenya Airways PLC's pilots union will give its final decision later tonight on whether to begin a strike on Saturday after the government urged them to it call off, the transport minister said on Friday, Reuters reported. The walkout, which is due to start at 6.00 am local time, will affect thousands of business and leisure travelers at one of the most important aviation hubs in the continent.
Kenya plans to tighten spending and step up efforts to collect more tax as it seeks to bring ballooning state debt under control, Bloomberg News reported. The budget deficit is projected to drop to 6.2% of gross domestic product in the year through June 2023, Treasury Secretary Ukur Yatani said on Thursday in his budget speech to parliament in Nairobi, the capital. That compares with an estimated deficit of 8.1% of GDP this year. He plans to finance the 862.5 billion-shilling ($7.5 billion) gap by raising 581.7 billion shillings domestically and 280.7 billion shillings offshore.
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Kenya Airways Plc has selected financial advisers at Seabury Securities to help the airline evaluate options to restructure its debt load, Bloomberg News reported. The airline, in which the Kenyan government has a 48.9% stake, faces mounting debts and depressed passenger demand amid pandemic-related travel restrictions. A representative for Kenya Airways said the carrier is in talks with several consultants, including Seabury, but declined to elaborate further. A representative for Seabury Securities declined to comment.
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Kenya’s debt service costs, which are expected to surge by 22% this fiscal year, are set to rise even further as the East African economy’s currency sinks to all-time lows against the dollar, Bloomberg News reported. Kenya’s Treasury expects to spend a record 1.17 trillion shillings ($10.4 billion) in the year through June on loan repayments, equivalent to about two-thirds of its revenue, according to the parliament’s budget office. This will be compounded by a 2.6% depreciation by the Kenyan shilling so far this year, after the currency fell to 112.06 per dollar.
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Kenya’s shilling depreciated to its weakest level against the dollar on record as increased demand for foreign exchange added pressure on the currency of East Africa’s largest economy, Bloomberg News reported. The shilling weakened as much as 0.3% to 111.63 per dollar before paring the loss to trade at 111.49 by 5:00 p.m. in the capital, Nairobi. The shilling depreciated for a fifth straight month in October, its worst stretch of losses in a year, according to data compiled by Bloomberg.
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Kenya has resumed servicing loans owed to China after Beijing’s six-month debt-repayment suspension expired in June, piling pressure on the exchequer, Bloomberg News reported. The government began 2021-22 remittances, with the first batch to the Export–Import Bank of China amounting to 82.7 billion shillings ($761 million), according to Kenya’s Controller of Budget Margaret Nyakang’o. Repayments are for debt taken for projects, including a railroad between Kenya’s capital, Nairobi, and the port city of Mombasa, Nyakang’o said in emailed responses to questions.
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Kenyatta International Convention Centre (KICC) has once again come under scrutiny after Auditor-General Nancy Gathungu reported that the top bosses at the center spent Ksh6.8 million that cannot be accurately accounted for, kenyans.co.ke reported. The auditor-general revealed serious breaches of protocol and fund misuse by KICC bosses who spent the money while attending a trip to Mauritius for an award ceremony where KICC had been named Africa’s leading meeting and conferences destination.