The government has moved to address concerns that it might default on its debt obligation with questions around the maturity of Eurobond mid-2024.
Deputy Central Bank of Kenya Governor Susan Koech said Kenya will never default on its debt obligations owing to the sustainability of the debt levels, and that the government has a plan that includes to first manage the $2billion Eurobond immediately before the end of this year through a liability management.
“If you look at overall the government’s plan especially on fiscal consolidation, you will see a deliberate effort from the government to ensure that the public debt remains sustainable, I think what has been worrying many people is the June 2024 Eurobond which my answer is Kenya will never default,” she said.
“Our debt levels are sustainable and the government has a plan that include first to manage the $2billion Eurobond, it will be repaid because it is in the government’s budgetary plan,” she added.
Speaking during 2024 Macroeconomic Outlook Forum organized by NCBA, President William Ruto’s top financial advisor David Ndii noted that without IMF Kenya would have defaulted but as it stands now the country is keen on implementing the IMF programmes enabling it to have access to the entire IMF balance sheet.
Ndii noted that as of now the 2024 Eurobond refinancing is fully funded, “We know the markets are closed, there is an IMF mission in town, but by the commitments we have, we have to come through with a couple of things, the reason we are doing that is because the IMF has facilities, it can augment our program as of now upto $650m, they can also give us access to an exceptional window in the event, so we have access to entire IMF balance sheet.”
“Whatever people think about IMF, I would like to tell them that that’s why they exist, they are there to help countries that are implementing the right policies to maintain global financial stability, and this Eurobond maturity is probably a global financial stability issue,” he noted.
“We will be doing some early redemption or buyback by the end of the year so as to improve chances of being able to go back to the market if the markets are open,” he said.
Earlier Reuters had indicated that Kenya’s approach to repaying the $2 billion 2024 bond is being watched closely by overseas investors, given its rising debt repayments, weakening currency and soaring bond yields, which have locked many developing countries out of international capital markets.
The Deputy Governor said despite the debt concern, the country’s GDP is likely to grow to 5.5 per cent in 2023 improving to 6.0 per cent in 2024. The growth will be supported government measures on manufacturing and agriculture, and growing service sector.