Written By Lisa Murimi
President William Ruto’s administration has begun negotiations with the United Arab Emirates (UAE) for a Ksh 193 billion ($1.5 billion) loan to help address Kenya’s growing budget deficit.
The loan, with a proposed interest rate of 8.2%, could be subject to changes as talks continue, according to Bloomberg.
Kenya’s budget deficit currently stands at 4.3% of its Gross Domestic Product (GDP), and the government is in urgent need of funds, especially as delays with a Ksh 77 billion loan from the International Monetary Fund (IMF) continue.
The UAE loan would serve as an alternative to the IMF funds, placing Kenya among African nations like Egypt, which recently secured a $35 billion bailout from Abu Dhabi.
Kenya’s ongoing negotiations with the IMF have been strained after President Ruto withdrew the controversial Finance Bill 2024 following public backlash, breaching an agreement with the Fund.
This led the IMF to withhold the June 12 disbursement, further complicating the country’s financial situation.
Recent meetings between IMF officials and Kenyan authorities have focused on addressing Kenya’s economic and fiscal challenges, with the government committing to reforms aimed at securing future financial support.
The loan talks with the UAE highlight Kenya’s growing reliance on external financing to manage its fiscal shortfalls
