Kenya Staggers $1.5 Billion UAE Loan on IMF Funding Concerns
Kenya plans to draw down on a $1.5 billion loan agreed with Abu Dhabi in tranches to remain within borrowing thresholds set in an International Monetary Fund program, according to people familiar with the matter.
Kenya will likely access about $700 million at the start of 2025, the people said, asking not to be identified as the discussions are private. The rest of the money may be disbursed later and timelines may change, they said.
To avert a debt crisis, Kenya signed up to a $3.62 billion IMF program almost four years ago that limits how much the nation can borrow to ensure the sustainability of its debt.
Kenyan authorities “will be considering the UAE transaction as and when the cash flow demands,” Treasury Principal Secretary Chris Kiptoo said in response to queries.
Kenya’s seven-year budget-financing loan from Abu Dhabi is the latest in a series of bailouts the emirates have extended to African countries to build influence on the continent and counter dominant powers such as the US, China and Russia. Earlier this year, the UAE agreed to a $35 billion investment deal for Egypt.
Calls to Abu Dhabi Fund for Development weren’t answered and an email to Abu Dhabi’s media office on Friday was not returned.
IMF’S RESERVATIONS
Last month, Treasury Secretary John Mbadi said the IMF “expressed some reservations” that the loan may expose Kenya to foreign-exchange risks and that the amount was beyond the 168.8 billion shillings ($1.3 billion) commercial-borrowing ceiling for the current fiscal year.
Treasury authorities in the East African nation must consider the loan’s impact on its fiscal and debt targets, IMF spokeswoman Julie Kozack told reporters on Thursday.
Kenya has one more review before the IMF program expires in March to unlock a much-needed disbursement of about $850 million after board approval. The authorities are struggling to meet targets after anti-government protests forced the Treasury to abandon plans to introduce new revenue-raising measures, leaving a $2.7 billion budget shortfall.
The government plans to revive some of those rejected taxes to cap a ballooning deficit, now estimated at 4.3% of gross domestic product, from 3.3% initially set out in June. It plans foreign borrowing of $2.8 billion, including commercial loans, and another $3.2 billion from domestic investors this fiscal year.
