Outstanding loans accruing to the World Bank and the International Monetary Fund (IMF) have grown by Ksh.175 billion in a year to mirror the outcome of Kenya’s return to concessional lending.
Data from the National Treasury shows the stock of public external debt from the two multi-lateral lenders rose to Ksh.1.46 trillion at the end of October from Ksh.1.28 trillion a year ago.
Total outstanding balances to the IMF stand at Ksh.235.4 billion while those accruing to the World Bank under its International Development Association (IDA) framework stand at Ksh.1.22 trillion.
After its dalliance with commercial borrowing represented by lent loans from commercial banks and international sovereign bonds, Kenya has returned to the stable of the World Bank & the IMF, beginning at the start of the COVID-19 pandemic.
As a consequence, the share of multilateral debt as a share of total external debt increased to 45.4 per cent as of the end of October from 42 per cent at the same time last year.
In contrast, the share of bilateral loans has fallen to 24.9 per cent from 27 percent earlier while commercial bank loans have fallen to 6.4 per cent from eight per cent.
Kenya’s stock of external debt reached Ksh.4.4 trillion at the end of October with Kenya’s entire debt burden peaking at Ksh.8.7 trillion for the period.
Kenya is expected to remain reliant on cheap financing sources in the current financial year as it looks to offset the debacle in financial markets that has seen it virtually locked out.
For instance, on Monday next week, the IMF Executive Board is expected to approve the disbursement of a Ksh.60 billion ($488 million) loan to Kenya as part of the fourth disbursement of a running 39-month program which will end with cumulative inflows of Ksh.287.5 billion ($2.34 billion).
At the same time, Kenya is at the tail end of discussions to accessing a Ksh.92.2 billion ($750 million) loan from the World Bank Development Policy Operations (DPO) with the inflows expected before the end of June next year.
The concessional financing is expected to plug the shortfall in external financing from commercial sources while serving to replenish depleted official foreign currency reserves at the Central Bank of Kenya (CBK).
The reserves remained below the statutory requirement of an equivalent four months of Kenya’s imports demand at 3.98 months of import cover.
Next week’s IMF fresh disbursement is expected to provide initial respite to the falling reserves which have taken a hit from a depreciating local currency and rising external debt repayments.
$1=Ksh.122.87
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