The government is planning to borrow another Sh250 billion from the international market to help seal the budget deficit despite experts warning about the country’s high debt.
Treasury PS Kamau Thugge told Bloomberg news service yesterday that the country will issue $2.5 billion (Sh250 billion) Eurobond and raise another $370 million (Sh37 billion) in syndicated loans to help cover the budget shortfall of Sh622 billion.
The government expects to raise Sh46 billion from grants with the remaining balance of Sh576 billion being raised through both external and domestic borrowing — including the Eurobond and syndicated loans.
News of a third Eurobond issue comes just eight months after the government raised Sh202 billion via a sovereign bond which was largely used to retire a syndicated loan of Sh101 billion from a consortium of banks last year.
The bond was issued in February in two equal tranches of 10 and 30 years for an annual interest rate of 7.25 per cent and 8.25 per cent respectively. They are expected to mature in 2028 and 2048.
In 2014, Kenya floated the first Eurobond of Sh280 billion in two tranches of five and 10 years. It is expected to pay the first tranche of Sh97.71 billion before end of June next year.
Details of how proceeds of the first controversial Eurobond were used remain scanty. While Treasury said that amount was used to finance infrastructural projects in the country, former Prime Minister Raila Odinga insisted the money was squandered by corrupt public officers.