Kenya has started talks with the International Monetary Fund (IMF) and other development financial institutions for a new loan to help it settle the $2.0 billion (Ksh297.6 billion) Eurobond whose repayment is due in June 2024.

The government is leaning to the multilateral institutions following tightness in the global markets which has rendered the issuance of fresh debt to refinance maturing debt an improbable route to settle the maturity which is eight months away.

IMF’s Deputy Director for Africa Catherine Pattillo told the Business Daily that the request for additional financing and the amount Kenya is seeking will be a key item during the upcoming review mission expected in December.

Kenya has so far tapped $2.1 billion (Ksh312.5 billion) from the ongoing programme with the IMF including the second largest drawdown of $410.0 million (Ksh61.0 billion) that was approved by the Fund’s executive board following the conclusion of the fifth review mid this year. The fund extended Kenya’s programme by 10 months to lapse in April 2025.

“For Kenya, the authorities are steadfastly addressing this and collaborating with us in the IMF, the World Bank and other donors to further strengthen their economic programme which they have been very much committed to and they are working to secure additional funding while implementing fiscal measures to address some of the funding requirements,” Pattillo says.

“Working with us, we will have an upcoming review mission and the team will be in dialogue with the authorities and other donors to continue to develop a programme that’s going to help implement those reforms. Those reforms are intended both to reduce debt vulnerabilities and ultimately help Kenya in regaining access to the markets,” the IMF official says.

This revelation from the IMF comes amid the appointment of Citi and Standard Bank as the lead arrangers for Kenya’s planned return to the global markets for a new Eurobond.

The Central Bank of Kenya (CBK) has indicated that the government is leaning more towards tapping into concessional financing to settle the maturing obligation.

“Currently, the credit market conditions are not favourable for refinancing the Eurobond. We have been engaging our lead managers and lead advisers on how to address the issue of the 2024 Eurobond. We have looked at several options, we are talking with multilateral institutions, the World Bank and the IMF, to see how much additional resources they can make available to us,” CBK Governor Kamau Thugge said on October 4.

If Kenya succeeds in unlocking additional financing from the development finance institutions, it will be the latest in a series of augmentations to existing programmes which have seen the country tap into cheaper credit from the Bretton Woods institutions.

In May, Kenya tapped into a $1.0 billion (Ksh148.8 billion) credit facility from the World Bank that was revised from the initial $750.0 million (Ksh111.6 billion) owing to the country’s requirements around budget support.

The fifth review of Kenya’s programme with the IMF in July saw the current programme augmented with an additional $551.4 million (Ksh82.0 billion) through the fund’s Resilience and Sustainability Facility.

In its latest forecast, the IMF has downgraded Kenya’s economic growth projection for 2023 from the 5.3 percent projected in April to 5.0 percent.

The fund has also downgraded Kenya’s 2024 growth projection marginally from 5.4 percent in April to 5.3 percent. This comes at a time global investors are seeking more than 18 percent return to invest in Kenya’s Eurobond, signalling increased perceptions of a sovereign default.

The yields on Kenya’s 10-year Eurobond maturing June 2024 are hovering between 18.4 and 18.7 percent this month, data published by the Central Bank of Kenya shows, reflecting the rising risk investors are placing on Kenya’s short-term debt.

Kenya has repeatedly reassured investors that it will refinance the debut 10-year Eurobond, ruling out the possibility of a sovereign default.

President William Ruto’s recent speech during the United Nations General Assembly calling for debt restructuring for developing countries has raised fears among investors over Kenya’s ability to refinance its fast-maturing external repayments.

Ruto did not refer to Kenya but said 10 low-income countries were in debt distress and 52 others were at high and moderate risk of falling into distress. - Business Daily

City Hall grade one magistrate Rehema Nassozi Ssebowa has remanded two men to Luzira prison on charges of obtaining money by false pretense and conspiracy to commit a felony.

The suspects; James Mugisha, a resident of Kitende, Kajjansi town council in Wakiso district, and Godfrey Maviri, a resident of Munyonyo, Makindye division in Kampala district, appeared before Nassozi Wednesday. 

The court heard that Mugisha and Maviri, along with others who are still at large, allegedly committed these crimes between August 2021 and November 2021 at the offices of NSB Advocates along Parliamentary Avenue in Kampala. They allegedly obtained $300,000 (about Shs 1.1 billion) by falsely claiming that they were selling 53 kilograms of gold to Hyun UK Kim, a Korean national. 

Additionally, it was alleged that they conspired to commit a felony during the same period and at the same location. Both accused individuals have pleaded not guilty to the charges. The prosecution, led by state attorney Mercy Yamangusho Khaidarah, informed the court that inquiries were complete.

However, due to the involvement of other suspects who are still at large, she requested a mention date to facilitate their arrest. Nassozi informed the accused that they have the right to apply for bail. However, the suspects stated that they did not have sureties present in court - prompting the magistrate to remand them until October 25.

According to unofficial sources close to the matter, the complainant was contacted by James Mugisha, who was acquainted with the alleged gold seller. Subsequently, Hyun UK Kim met with the seller after being picked up from the airport by the seller's alleged son and interpreter.

It is reported that they met at the Imperial Residence Apartment, where the gold nuggets were shown to the complainant. They later visited M/S NSB Advocates and Legal Consultants, where a memorandum of understanding (MoU) was signed, and a deposit of $208,000 was paid by the complainant. 

However, instead of transporting the gold by land as requested by the complainant, he was informed that he needed to pay $62,000 for cargo flight insurance. During these transactions at the law firm, Godfrey Maviri was allegedly in the company of the gold seller. Subsequently, investigators claim to have recovered six kilograms of gold nuggets during a search at Maviri's home. 

Notably, some law firms in Kampala have faced allegations of involvement in gold scams, with accusations of collusion with suspects. - URN/The Observer

Kenya has officially joined the Pan African Payments and Settlement System (PAPSS), Trade Cabinet Secretary Moses Kuria has said.

Kuria on Friday, September 29, said that Kenyan companies will now be able to pay for trade transactions in local currencies.

“This means that Kenyan companies can trade with their peers from other African member states using our local currencies, a major boost for the African Continental Free Trade Area (AfCFTA),” said Kuria.

The agreement, signed by the Central Bank of Kenya (CBK) will be a major boost for free trade within the continent, facilitating greater economic stability.

PAPSS, formally launched in January 2022 is a digital centralised payments and settlement system for intra-African trade in goods and services.