Kenya plans to raise $1 billion by the end of June and an additional 1 billion euros in the fiscal year starting July through Eurobond sales, according to Haron Sirima, director general of the nation’s Public Debt Management Office.
The planned issuances are consistent with the budget policy, Sirima said by phone, declining to give further details on the time-line of the sales.
The East African nation is increasing foreign commercial loans as investors seek high-yielding debt from emerging and frontier markets amid record liquidity in developed countries. Previously, the Kenyan government said it would focus on concessionary borrowing to avoid a pile up of expensive external debt.
The new loans will add on to public debt that stood at 7.28 trillion shillings ($66.3 billion) by the end of December, equivalent to 65.6% of gross domestic product in nominal terms, according to government data. The National Treasury wants to lift the statutory debt ceiling above 9 trillion shillings to accommodate anticipated funding gaps from 2021-22.
The coronavirus pandemic has slashed government revenue and increased spending pressures, pushing the economy’s budget deficit in the year through June to an estimated 8.7% of gross domestic product, compared with an earlier projection of 7.5%. Kenya’s debt servicing costs consumed 61% of tax collections in the six months through December.