President William Ruto, currently attending the Italy-Africa Summit in Rome, addressed concerns about Kenya’s debt status, emphatically dismissing any notion of defaulting on the KSh 306 billion Eurobond loan due in June 2024. In an interview with Reuters, President Ruto reassured the international community about Kenya’s commitment to meeting its financial obligations.
President Ruto revealed plans to initiate a buyback of part of the Eurobond loan in February and March, dispelling any uncertainties surrounding the government’s repayment strategy. The decision to stall the buyback in December 2023, as per Ruto’s earlier announcement to repurchase $300 million of the $2 billion Eurobond, was attributed to prudent advice from government advisors.
Addressing the question of how Kenya intends to fund the Eurobond payments, President Ruto suggested that tapping into the capital markets could be a viable solution. He pointed to the favorable market conditions experienced by other countries, indicating the possibility of Kenya issuing another Eurobond to secure funds for the June repayment. This strategy aligns with the recent success of Ivory Coast, which raised $2.6 billion through oversubscribed bonds, highlighting the attractiveness of capital markets for developing nations.
In related news, a report from the Institute of Public Finance (IPF) underscores the high risk of debt distress for Kenya. The report emphasizes the consequences of years of aggressive borrowing, raising concerns about the lack of substantial economic growth and job creation as tangible benefits. The IPF report emphasizes the need for Kenya to demonstrate measurable advancements, such as higher economic growth and the creation of more productive jobs, to mitigate the risk of debt distress.
President Ruto’s statements at the Italy-Africa Summit and the outlined repayment strategy provide insights into Kenya’s commitment to managing its debt obligations. As the country navigates the complexities of its economic challenges, the approach to Eurobond repayment and potential market engagement underscores the importance of strategic financial planning.