A New York Based Securities firm, BofA Securities, predicts that Kenya will seek funds from international investors through a Eurobond in the second half of 2020. This is despite reassurances from the Treasury Head CS Ukur Yatani, that Kenya will not issue a Eurobond or apply for a syndicated loan this year.
According to the US firm, Kenya’s national debt is still within manageable levels given the strong GDP growth in the past five years. The economy is projected to grow at 6 per cent in 2020 and at 6.5 per cent in the next two years.
Kenya expects a precautionary loan facility from the IMF to cushion the country from economic shocks. The facility is likely to boost investors’ confidence in the economy and support fiscal policies.
“Kenya has strong regional and domestic buffers with little need for a precautionary balance of payments facility, but this would help anchor fiscal consolidation efforts and investor sentiment,” the Bloomberg Terminal quotes a report produced by BofA Securities.
The largest economy in East Africa has already issued three Eurobonds since 2014 with some economists raising concerns over the high level of public debt.
At the moment, Kenya’s debt is at KSh6.05 trillion, tripple the amount it was when the current government took office in 2013. Some of the funds have been put into infrastructure projects and a large portion of the debt can not be accounted for.
Treasury has put in measures to curb unnecessary spending such as the creation of the Public Investment Management Unit to vet government projects. Additionally, the Treasury CS Ukur Yatani has slashed extravagant trips by public officials in an effort to reduce recurrent expenditures. Nonetheless, Kenyans are yet to see the gains from the recent austerity measures.