Treasury has approached Trade and Development Bank (TDB) for a loan for purposes of repaying its loan of KES 51.3 B by September. This loan is the largest the treasury is facing this year and therefore they are seeking measures to repay the loan in time. The Treasury Cabinet Secretary John Mbadi said that they would go for the loan offered by TDB if the loan comes with favourable terms. Treasury is avoiding using the revenues to repay the loan since the country is currently facing high expenditures growth. This move of acquiring a loan from TDB to repay the current debt obligation is meant to enhance effective debt management by the country and ease pressure on the country finances.
Treasury is using refinancing to reduce its cost of borrowing and manage debt in the country. The syndicated loans and Eurobonds are some of the loans that can make the government face difficulties in paying this is due to their high repayment costs.The government has therefore initiated other measures to repay debt, one of these measures include the standard Gauge Railway(SGR) loan which was originally taken by US Dollars, by swiping of currency from US Dollars to Chinese Yuan reduces the cost of borrowing. Therefore this measure is meant to reduce the costs of repaying the loan up to half and this helps the government in debt management.
The government has also issued two Eurobonds, one in 2024 worth KES 258.4 billion and the other one issued for the period 2024-2027 of KES 116.3 billion. These Eurobonds are meant to repay debt before maturity. The country is trying to reduce events where huge sums of debt fall due at once. The treasury is therefore torn between refinancing of the debt and using of the tax revenue to repay the debt.
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