Treasury sets record straight on Eurobond payment

The National Treasury has set the record straight on Kenya’s payment of the $2 billion Eurobond.

Reports had emerged that Kenya had made a U-turn on the payment and would not settle the first instalment of the Ksh309.9 billion Eurobond loan in advance this month.

However, in a statement signed by Treasury CS Njuguna Ndung’u, the ministry has explained its position and how the payment will be settled as agreed by the lenders.

“In its unwavering commitment to upholding a resilient sovereign credit rating and facilitating access to new development financing, Kenya remains dedicated to fulfilling all debt obligations with international lenders.

“Recently, Kenya successfully executed a payment of $68.7 million (equivalent to Ksh10.8 billion) in interest, a necessary instalment on the $2 billion Eurobond. This financial commitment, achieved through the prudent use of revenue collections, underscores Kenya’s steadfast dedication to meeting external obligations,” the statement said.

The Treasury added that the timely settlement of interest payments on the Eurobond has not only sent a positive signal to investors but has also resulted in a reduction in yields on Kenya’s Eurobonds in the global financial markets.

“The final interest payment on this Eurobond is scheduled for the last week of June 2024, alongside the repayment of the principal amount of $2 billion.

“Since July 2023, the government has diligently implemented a comprehensive plan for debt service payments, combining revenue and concessional financing to retire high-cost debts within the national debt portfolio,” the statement added.

The government’s tax policy was also lauded for the impact it has had on revenue collection.

“Additionally, after a slow start in revenue collection at the fiscal year’s commencement, the preliminary outcome for the six months ending December reflects an impressive turnaround. This positive shift is attributed to the government’s tax policy and administrative reforms,” it added.

According to the Treasury, Kenya has maintained a robust economic outlook that is supported by policy reforms and collaborations with multilateral and bilateral development partners.

The communique from the Treasury also revealed that substantial external inflows from the World Bank, IMF, and other development finance institutions, in addition to key bilateral partners, are expected next year.