By CultureBanx Team
Kenya could pay a higher risk premium for the $2.5B Eurobond
African countries with IMF-funded programs usually benefit from discounted yields on their Eurobonds
CBx Vibe:“Worried” Clyde Kelly
Debt, debt and more debt has continued to cripple Kenya’s economy even with the International Monetary Fund (IMF) urging the country to improve its revenue collection mechanisms and effectively limit borrowing. The IMF has made $1.5 billion available for Kenya to draw from in the event they experience balance-of-payments shock and the country’s central bank is considering taking the money.
Why This Matters: Kenya’s Central Bank Governor Patrick Njoroge had originally stated the country was not desperate to renew a $1.5 billion IMF loan, even as the government struggles to raise money to meet its maturing debt obligations. Right now Kenya’s average loan grace period has dropped from 10 years to an average of four years, exposing the country to a vicious debt cycle. The IMF wants the country to consider long term debt instruments to effectively space out repayments. Its first external debt to mature this year will be the $800 million syndicated loan that Kenya obtained from Standard Chartered, Standard Bank, Citi and Rand Merchant Bank back in March 2017.