The Kenyan government is set to receive a Ksh193 billion loan from the United Arab Emirates (UAE) by the end of next week, according to reports.
The loan, which was negotiated last year, is valued at $1.5 billion and carries an interest rate of approximately 8.2 per cent.
According to Bloomberg, the funds are expected to be deposited into the government’s accounts in the last week of February.
This financial boost comes at a critical time for President William Ruto’s administration, which is struggling to cover budget deficits in several key sectors.
Initially, there were discussions about disbursing the loan in separate portions, but it has now been confirmed that the full amount will be released in a single payment.
Earlier, reports indicated that the government intended to stagger the disbursement to remain within the borrowing limits set by the International Monetary Fund (IMF). Under this earlier plan, Kenya was to receive the first portion of Ksh90 billion in January, with the remaining funds to be transferred later.
Last year, the Kenyan government turned to the UAE for financial assistance as part of a strategy to diversify its funding sources.
Traditionally, Kenya has relied on eurobonds, loans from China, and financial support from institutions like the IMF and World Bank. However, with increasing financial pressures, the government has been seeking alternative sources of funding to sustain its budget.
The National Treasury has been under immense pressure to secure additional funds to keep government operations running smoothly.
Earlier this month, reports surfaced that the government is considering negotiating another loan agreement with the International Monetary Fund (IMF). This new arrangement could be finalized before the current IMF programme expires in April.
Treasury Cabinet Secretary John Mbadi confirmed this possibility in an interview with Reuters, saying, “Maybe before the current programme ends in April, we should have some indications on whether we are starting a new one and what that new programme will entail.”
Mbadi also revealed that the government is exploring multiple financial options, including the possibility of issuing another eurobond to raise funds for this financial year. “We have the option of taking that [IMF programme]… or we can go to the market, which is now open, especially given our good and improving credit rating,” he stated.
The urgency to secure more funding has been growing, particularly in crucial sectors like health and education.
The Ministry of Health is facing a crisis, with private hospitals owed Ksh30 billion in unpaid debts. Similarly, schools across the country are struggling to keep their doors open due to financial shortfalls.
Without immediate intervention, there is a risk of disruptions in education and healthcare services, putting additional pressure on the government to act swiftly.
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