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Here is what's next for Kenya after abandoning $300M early payment for $2B Eurobond

Treasury CS Njuguna Ndung'u speaks after government abandons $300M early payment plan for $2B Eurobond

A collage of President William Ruto and Treasury CS Prof Njuguna Ndung'u

Treasury Cabinet Secretary Njuguna Ndungu has reiterated Kenya's commitment to meeting its debt service obligations and sustaining a good sovereign credit rating.

In a statement on Thursday, December 28, CS Ndung'u said Kenya recently made a payment of $68.7 million in interest on the $2 billion Eurobond.

This comes after the government backtracked on a plan to pay $300 million of the bond, by December 2023, as committed by President William Ruto

The Cabinet secretary stated that Kenya's settlement of the recent $68.7 million interest payment on the Eurobond not only serves as a testament to its fiscal responsibility but also resonates as a positive signal to international investors.

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The payment has already led to a reduction in yields on Kenya's Eurobonds in global financial markets.

"The final interest payment on this Eurobond is scheduled for the last week of June 2024, alongside the repayment of the principal amount of $2 billion," the statement read in part.

The CS reiterated that the government, since July 2023, has diligently executed a comprehensive plan for debt service payments.

This strategy combines revenue and concessional financing to retire high-cost debts within the national debt portfolio.

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Looking ahead, substantial external inflows are anticipated between January and March 2024 from key international institutions such as the World Bank, IMF, and other Development Finance Institutions.

Collaborations with bilateral partners are also expected to contribute significantly to bolstering foreign exchange reserve levels.

These inflows are poised to enhance Kenya's fiscal resilience and provide a cushion against external economic uncertainties.

Despite a slow start in revenue collection at the beginning of the fiscal year, the preliminary outcome for the six months ending December reflects an impressive turnaround.

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This positive shift is attributed to the government's effective tax policy and administrative reforms, showcasing a proactive approach to fiscal management.

The CS said that Kenya maintains a robust economic outlook supported by ongoing policy reforms and collaborations with multilateral and bilateral development partners.

The fiscal consolidation plan, driven by revenue generation, aims to curtail borrowing, reduce debt levels over the medium term, and ultimately enhance the well-being of Kenyans.

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