Kenya is in the process of securing $1 billion (Sh149.5 billion) from regional lenders, including the Africa Export-Import Bank (Afrexim) and the Trade and Development Bank, as part of its strategy to partially repay the maturing $2 billion (Sh299 billion) Eurobond set to mature in June 2024.

Additionally, Kenya plans to seek a fresh loan from the World Bank and the International Monetary Fund (IMF), with the IMF expected to conduct its sixth loan review mission in the country next month.

President William Ruto’s administration is turning to the multilateral institutions on tight capital markets as investors demand higher returns, upending options for another Eurobond issuance.

Appearing before the National Assembly’s Finance and National Planning Committee, Central Bank of Kenya (CBK) governor Kamau Thugge said the additional funds will be among the top talks with IMF while regional lenders have already been contacted.

“We’ve seen some improvement in some capital inflow. We are discussing with some regional development partners on providing additional financing. We do expect an overall balance of payment in the range of $1 billion in the event that we do get the financing from regional development banks,” said Thugge.

Should Kenya succeed in getting extra financing from the development institutions, it will add to the series of augmentations to existing programs that have seen the country tap into cheaper credit from the Bretton Woods institutions. Afrexim gave Kenya $3 billion (now Sh448.5 billion) early this year.

Kenya also has so far tapped $2.1 billion (Sh312.5 billion) under the current 48-month loan facility with IMF, including the second largest drawdown of $415.5 million (now Sh62.1 billion) disbursed after the fifth review last July.

The last review equally unlocked $551.4 million (Sh82.4 billion) via IMF’s concessional credit known as the Resilience and Sustainability Trust (RST) that Kenya requested.

This upcoming sixth review by the IMF will give Kenya another $400 million (Sh59.8 billion) loan accessible by December 2023, while the World Bank is expected to avail $750 million (Sh112.13 billion) by March 2024.

Treasury has severally defended the additional borrowings, arguing that compared to commercial loans, the multilateral funds are cheaper and have longer maturity, thus offering a reprieve to debt repayment pressures.

It is also aimed at cutting reliance on the domestic capital market, which will, in turn, force local investors to slash interest rates due to reduced demand.

“Externally, the strategy [2023 Medium-Term Debt Management Strategy] seeks to maximize on concessional borrowing while rolling over the commercial debt,” Treasury Cabinet Secretary Njuguna Ndung’u told the debt committee last month.