IMF bailouts key in Kenya honouring Sh302b Eurobond, says Ndii

Kenya could default on repaying the $2 billion (Sh302 billion) Eurobond, which is set to mature in June next year, in the absence of an International Monetary Fund (IMF) bailout.

According to top President William Ruto’s economic adviser David Ndii, this is the reason why the country is eager to access the IMF bailout programme despite the strict conditions it entails.

IMF conditions, such as the need to broaden the tax base, are necessary as alternative financing options for the Eurobond beyond the Bretton Woods lender remain uncertain, said Dr Ndii.

He revealed IMF has already backed the release of Sh98.4 billion to Kenya.

“Without the IMF programme, we would probably default,” said Dr Ndii yesterday at an economic forum organised by the NCBA Group.  

The potential challenge of refinancing upcoming maturing debt has been highlighted by the World Bank, cautioning against the backdrop of increasing borrowing costs and more stringent market conditions.

However, President William Ruto and top Treasury and Central Bank of Kenya (CBK) officials have dispelled concerns regarding a potential default.

“As of now the 2024 Eurobond (refinancing) is fully funded,” Dr Ndii said, adding that an IMF mission is in town to firm up a new financing programme where Kenya would push for various options. “The IMF has facilities. It can augment our programme as of now up to $650 million (Sh98.4 billion) that they have agreed to approve. They can also give access to an exceptional window. We have access to the entire IMF balance sheet.” Dr Ndii’s comments were echoed by Central Bank of Kenya (CBK) Deputy Governor Susan Koech.

“What has been worrying people is the June 2024 Eurobond. My answer is Kenya will never default,” she said.

Worsening market conditions have caused yields to surge in international markets, shutting the door for a fresh Eurobond.