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- Title
KENYA : Eurobond Issued.
- Abstract
Kenya's government plans to issue $1.5 billion in debt at a high interest rate of 10.375% to avoid lengthy debt restructuring negotiations with various creditors. This move aims to address concerns about Kenya's ability to repay a $2 billion bond due in June. However, it is a risky strategy as the country faces $5.9 billion in repayments over the next two years. To meet these obligations, the government is using a combination of commercial funding, credits from the IMF and World Bank, and austerity measures. While this strategy may boost investor confidence and delay some repayments, it comes at a high cost and risks alienating Ruto's supporters. Kenya's decision to issue bonds at a high interest rate is seen as a danger level by financial experts, and the IMF's support has helped backstop the country's position. The government has also implemented income and consumption taxes, causing a decline in living standards and rising inflation. Economists argue that new borrowing should not be used to cover long-term budget planning failures. Kenya's tax revenues have steadily fallen since 2014, and the country needs to strengthen tax collection to meet its development agenda. Additionally, Kenya and Namibia have been placed on the Financial Action Task Force's "grey list" for not doing enough to tackle money laundering, which may impact Nairobi's standing as a financial center. However, the economic damage is expected to be minimal.
- Subjects
KENYA; ECONOMIC forecasting; INTEREST rates; PUBLIC finance; INVESTORS; PUBLIC debts; INVESTOR confidence; EXTERNAL debts; DEBT relief
- Publication
Africa Research Bulletin: Economic, Financial & Technical Series, 2024, Vol 61, Issue 2, p24636C
- ISSN
2053-227X
- Publication type
Article
- DOI
10.1111/j.1467-6346.2024.11537.x