Government borrows Sh223.5 billion in five months

The 1,000 Kenyan Currency note. [Wilberforce Okwiri, Standard]

President William Ruto’s government has taken 11 new loans worth Sh223.54 billion in the last five months, a report by the Treasury has revealed.

The loans were contracted from September 1, 2023, to January 31, 2024, all but one of the loans have been procured from multilateral lenders while the remaining one is from commercial lenders.

According to the report tabled before Parliament by National Assembly Deputy Minority Whip Naomi Waqo, the loans are to promote savings for targeted youth at a national scale, improve the financial viability of Kenya Power Company (KPLC) and increase access to electricity, increase access to irrigation water for project beneficiaries and to improve the delivery and resilience of urban infrastructure and services.

“The total value of the 11 new loans signed is equivalent to Sh223,541,581,121. Two of the loans had been disbursed by the time of submitting this report,” read the report in part.

The Treasury indicates that a loan of Sh5,834,204,000 (USD 40,000) was on October 23, 2023, signed between the Opec Fund for International Development and the Government of Kenya.

The funds are meant for the development of urban roads in five counties in the former North Eastern Province. Kenya is expected to start repaying the loan on October 15, 2028, through to April 2043.

“…To support Kenya's North Eastern Province in achieving its full economic potential and improving the socio-economic welfare of its population. More specifically, the project shall create new job opportunities because of new transportation possibilities, improved market access and the possibility of labour migration. The project shall also enhance economic development and boost investment, as a result of the reductions in travel time and costs,” reads the report in part.

Another Sh14,298,573,170 loan (EUR 91,100,000) was also signed on December 6, 2023, between the International Development Association (lDA) and the Government of Kenya. The monies will go towards the National Youth Opportunities Towards Advancement Project.

Kenyans are expected to start repaying the loan from October 15, 2029, through to April 2035 and will be repaid in Euros.

Ruto’s administration also borrowed Sh28,581,450,870 (EUR 182,100,000) for the Kenya Green and Resilient Expansion of Energy Programme. The programme seeks to improve the financial viability of KPLC and increase access to electricity. It was signed on December 15, 2023, with IDA. The loan will be repaid from October 2028 through to April 2053.

MPs also learnt that a Sh36,994,222,790 loan (EUR 235,700,000) was contracted between IDA and the Government of Kenya on December 19, 2023. The monies will go towards the second programme for strengthening governance for enabling service delivery and public investment in Kenya.

Citizens will start repaying the loan from March 2029 to September 2053.

“The purpose of the loan is to enhance revenue mobilisation and deepen accountability and transparency of public finance management at the national government level,” reads the report.

On December 21, 2023, the Kenyan Government signed another loan with IDA amounting to Sh4,366,839,851 (SDR 22,600,000). Its expected repayment period begins in April 2029 through to October 2053.

The purpose of the loan, the report says, is to increase access to irrigation water for project beneficiaries, and enhance the institutional framework and strengthen capacity for water security and climate resilience in certain areas of the territory of the recipient.

Parliament also learnt that another loan of Sh28,581,450,870 (EUR 182,100,000) was also signed on December 15, 2023 between IDA and Kenya. The repayment period begins in October 2029 through to 2035. The funds are expected to improve financial viability of KPLC and increase access to electricity.

Under the National Youth Opportunities Towards Advancement Project, another loan of Sh14,298,573,170 (EUR 91,100,000) was also contracted between IDA and the Ruto administration. Its purpose, the Treasury explained, was to increase employment, earnings, and promote savings for targeted youth, at a national scale.

Additionally, a loan for the Second Kenya Urban Support Programme was signed on December 21, 2023, between lDA and the government. It was valued at Sh21,440,012,020 (EUR 136,600,000) and the repayment starts in 2029 through to April 2035.

Purpose of the loan is, “to strengthen the capacities of urban institutions to improve the delivery and resilience of urban infrastructure and service, enhance the private sector engagement in urban planning and support the transition of refugee camps into integrated host community and refugee settlements.”

The report further shows that another Sh21,440,012,020 loan had also been signed between Kenya and IDA on December 21, 2023. The repayment period was also the same as the previous one.

Kenya also signed for a syndicated term loan facility valued at Sh30,629,571,000 (USD 210,000,000) from the Eastern and Southern African Trade and Development Bank on December 28, 2023. 

The monies are to be channelled towards the funding of development projects; refinancing or repurchasing of Eurobonds issued by the government and payment of any fees, costs and expenses in connection with the finance documents.

Additionally, Kenya undertook a Sh17,076,671,360 loan (EUR 108,800,000) from IDA to aid health emergency preparedness, response and resilience programme using the multi-phase programmatic approach.

“The purpose of the loan is to strengthen health system resilience and multi-sectoral preparedness and response to health emergencies in Kenya,” reads the report.