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
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.
The International Monetary Fund will release $407 million in new funding for Kenya’s government, citing the nation’s dedication to economic overhauls, Bloomberg News reported. The Kenyan authorities have shown strong commitment amid challenging circumstances and are acting to reduce debt vulnerabilities while maintaining support for the economic recovery, the IMF said in a statement after the executive board completed a review of its loan programs.
Kenya expects a review of an International Monetary Fund program to be concluded successfully, in order to allow the release of $410 million in new funding for the government, Bloomberg News reported. “We expect the review to be successful given the progress we have made towards the goals we had set for ourselves under the programme,” Kenya’s National Treasury Secretary Ukur Yatani said in a statement on Twitter on Wednesday. The government plans to narrow its budget deficit for the year starting July 1 to 7.5% of gross domestic product from an estimate of 8.6% in the current period.
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The International Monetary Fund approved a $2.34 billion financing package for Kenya to support the country’s Covid-19 response and address an urgent need to reduce debt vulnerabilities, Bloomberg News reported. Approval of the so-called Extended Credit Facility and Extended Fund Facility will enable immediate disbursement of about $307.5 million for budget support in the East African nation, the Washington-based lender said Saturday in an emailed statement. “Kenya was hit hard at the onset by the Covid-19 pandemic,” the IMF said.
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Former Labour Cabinet Secretary Kazungu Kambi has suffered a huge blow after a court declined to rule out a bankruptcy case facing him for failing to pay a Ksh 390 million loan, Kenyans.co.ke reported. Kambi had filed a petition asking for more time to service the loan owed to a local bank arguing that his appointment to the National Lands Commission (NLC) meant that he had a source of income and would afford to clear the debt in monthly installments. Reports indicate that Kambi's net worth is Ksh 50 million.