"IMF Warns Kenya About Receiving UAE Loan"

" IMF Warns Kenya About Receiving UAE Loan \r\n \r\n\r\nThe IMF\u2019s communications director, Julie Kozack, has advised against a Sh200 billion ($1.5 billion) loan, which Kenya hopes to secure from the UAE, noting that this could expose the East African country to foreign exchange risks.\r\n\r\n \r\n \r\n\r\nThe director also pointed out that the requested sum exceeds the commercial borrowing cap Sh168 billion ($1.3 billion).\r\n\r\n \r\n \r\n\r\n\u201cWe assess Kenya to have a high risk of debt distress, any new borrowing should be considered within the context of a comprehensive fiscal strategy to reduce debt vulnerabilities, while also addressing the recent and emerging fiscal challenges,\u2019\u2019 Julie stated.\r\n\r\n \r\n \r\n\r\nThis assessment is coming a few days after Kenya committed to securing the UAE loan in phases.\r\n\r\n \r\n \r\n\r\nNational Treasury CS John Mbadi disclosed in October that negotiations are underway with the United Arab Emirates for a $1.5 billion commercial loan with a seven-year term and an interest rate of 8.25 percent.\r\n\r\n \r\n \r\n\r\n\u201cThis loan is cheaper than the Eurobond we borrowed at 10.7 percent,\u201d Mbadi told a news conference.\r\n\r\n \r\n \r\n\r\nHe was referring to a $1.5 billion dollar-denominated bond issued in February to partially buy back a piece of a maturing $2 billion Eurobond (Sh258 billion).\r\n\r\n \r\n \r\n\r\nKenya\u2019s National Treasury PS Chris Kiptoo disclosed to journalists that the government intends to split the cash injection in tranches to remain under the IMF's borrowing limits with the first Sh90 billion likely in January and the remainder to be transferred to Kenyan accounts later.\r\n\r\n \r\n \r\n\r\nKenya and the UAE currently share a budding bi-literal relationship.\r\n\r\n \r\n \r\n\r\nIn February,\u00a0 both countries signed \u00a0a comprehensive economic partnership agreement (Cepa), which was intended to help Kenya distribute its products across the Asian market, including the Middle Eastern section.\r\n\r\n \r\n \r\n\r\nAdditionally, Kenya was among the first African countries to begin a dialogue on bilateral trade deals with the United Arab Emirates in 2022, to bolster its oil market.\r\n\r\n \r\n \r\n\r\nFollowing the announcement of the proposed debt, the Kenyan currency (shilling), which had been increasing in value relative to the US dollar, had a modest decline in late October before retreating to the 129 margin, where it has remained for over two months.\r\n\r\n \r\n \r\n\r\nAs reported by\u00a0 the Star, the Shilling closed at 129.61 on Wednesday.\r\n\r\n \r\n \r\n\r\nKenya currently has one of Africa\u2019s largest debts to the IMF, with a total IMF credit outstanding of 3,022,009,900.\r\n\r\n \r\n \r\n\r\nThe East African economic giants ranks 3rd amongst\u00a0 African countries with the highest debts \u00a0to the International Monetary Fund.\r\n\r\n "

"IMF Warns Kenya About Receiving UAE Loan"

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