The International Monetary Fund (IMF) has expressed optimism regarding Kenya’s imminent return to the international debt market through a Diaspora Bond.

The lender suggests that Kenya is likely to explore a Diaspora Bond as one of its potential debt instruments, a concept the government has been deliberating for a while.

Drawing parallels with Cote d’Ivoire, Abebe Aemro Selassie, the Director of the African Department at the IMF, views the latter’s resurgence in the markets as a positive indicator for Sub-Sahara Africa.

Cote d’Ivoire’s recent Eurobond sale brought hope to Kenya, signalling renewed investor appetite for sovereign debt of emerging and frontier economies.

Experts say the bond sale signals rising confidence in African countries’ sovereign debt, overriding concerns that had frozen fundraising.

Selassie attributes this success to years of robust reforms and effective management of macroeconomic imbalances. He notes similar efforts in Kenya, citing solid structural and fiscal reforms to stabilise debt levels and foster economic stability.

“I think it plays off many years of strong reform and having kept macroeconomic imbalances well contained. We see in Kenya also very solid and very, very strong efforts having been made to make sure that macroeconomic imbalances are contained,” he said in a recent interview.

Selassie noted that IMF is particularly pleased by all the structural reforms that the government has been doing, including fiscal reforms to keep the primary balance at a level which will stop, stabilizing debt and continuing to make sure that it can trend downwards in general.

Abebeb efforts like this have often been followed by market access. “So hopefully with the easing of financing conditions that are expected going forward, Kenya can, in due course, return to markets.”

Prime Cabinet Secretary and Cabinet Secretary for Diaspora Affairs, Musalia Mudavadi, echoed the sentiment, outlining plans for a Diaspora Bond structured in collaboration with the World Bank’s Multilateral Investment Guarantee Agency (MIGA) and the National Treasury. Speaking during a visit to the US, Mudavadi said that the bond offers attractive returns to diaspora investors while diversifying Kenya’s public debt profile.

“We are working on a secure bond that will offer better returns than interest rates in the source markets for our diaspora remittances. The bond will enable the Government to diversify its public debt mix, reducing our exposure to costly commercial debt,” Mudavadi said, during discussions with MIGA’s Executive Vice President, Hiroshi Matano.