Kenya is negotiating a $1.5 billion loan with the United Arab Emirates, offering an 8.25% interest rate and a seven-year repayment period, according to Finance Minister John Mbadi.
The country is seeking alternative financing methods after protests derailed planned tax hikes and delayed funding from the International Monetary Fund (IMF). Last month, Reuters revealed details about the potential loan arrangement.
Mbadi highlighted that the UAE loan would be cheaper than the Eurobond issued in February at a 10.7% interest rate. The Eurobond was valued at $1.5 billion and aimed to refinance a maturing $2 billion bond.
He confirmed that Kenya had responded to the IMF’s concerns about the current lending program, which was impacted by the protests and the failed finance bill. Additional discussions with the IMF are scheduled in Washington DC next week.
The IMF board is expected to review Kenya’s program on October 30, though an official date remains unconfirmed. Kenya plans to seek a new IMF program next year, but Mbadi called for more realistic fiscal targets.
The government is also addressing concerns about the UAE loan’s exposure risks, as it is an external dollar-denominated loan. However, Mbadi stressed the loan’s cost-effectiveness compared to other options like Eurobonds.
