- Kenya is expected to pay the principal amount of US $2 billion approximately (314 billion shillings) and the interest accrued from the loan.
- Last week, Kenya paid USD 68.7million equivalent KES 10.8billion as interest payment from our local revenue.
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What is Eurobond?
This is money borrowed by Kenya in 2014 from European money market to the tune of USD 2 billion.
The money is due for payment in June 2024.
Kenya borrowed short term high interest loans in the past when our economy was rebased in 2014 and the country was reclassified as a lower middle-income country (LMIC) up from the previous category as a least developed country (LDC) these short terms loans have been unsustainable, however the Kenya Kwanza administration has been committed to pay the debts.
What are the obligations we need to honor now and later?
Kenya is expected to pay the principal amount of US $2 billion approximately (314 billion shillings) and the interest accrued from the loan.
Last week, Kenya paid USD 68.7million equivalent KES 10.8billion as interest payment from our local revenue.
This was done on time.
A move that has sent a strong positive message to investors, that Kenya is committed to honouring its debt and other external obligations.
It's good note that only one interest payment is remaining, and it shall be paid on the fourth week of June 2024 together with the principal amount.
When did we promise to pay? Have we kept our word?
H.E. President William Ruto has given assurance that the government is committed to honouring all of our debt obligations and he has initiated measures to help manage our public debt and borrowing.
When we collect revenue the first payments that the government makes ispublic debt, before any other expenditure.
How shall we pay public debts going forward?
The government has put in place a comprehensive plan on public debt management since July 2023.
Debt servicing shall thus be done through a mixture of revenue raised locally and concessional financing in order to do away with short term debts which have very high interest rates.
Through president Ruto's engagement internationally he has been able to secure financing from the World Bank, IMF, Africa Development Bank and other bilateral (country to country) partners.
The new financing will increase our foreign reserve levels beginning January - March 2024.
Is Kenya collecting enough revenue to pay its debt obligations?
Although revenue collection was low at the beginning of this financial year, the monies raised for the last six months has been impressive due to policy and tax reforms that have been rolled out by the government.
We thus wish to give assurance that Kenya is on course to honour its debt obligations in due course.
Isaac Mwaura is the Government Spokesman