The National treasury is seeking to get more funds so as to cover for the deficit in the current budget. The government seeks to get a 76.8 billion syndicated loan whereby four banks have been approached over the same.

A syndicated loan is one which a group of lenders come together so as to contribute and ultimately meet the borrower’s credit needs jointly.

Citibank, Rand Merchant Bank, Standard Bank and Standard Chartered Bank are the banks involved in the transaction that will also serve to shore up Kenya’s dwindling foreign currency reserves.

The loan will be coming in two tranches, the first one maturing after three years and the second one taking five years.

This comes just days after parliament passed a bill to remove the 10 trillion debt ceiling and instead pegged it at 55% of the Gross Domestic Product (GDP)

The National Treasury, through Supplementary Budget I 2022/23, has proposed to recalibrate borrowing in the current financial year with a bias for more externally-sourced financing.

 

It plans to slash domestic borrowing for the current financial year from Sh581.7 billion to Sh415.5 billion and increase external borrowing from Sh280.7 billion to Sh378.9 billion.

 

The total portfolio of public debt is currently slightly skewed in favour of domestic borrowing.

 

External loans represented 49.8 percent of total debt at the end of October 2022, while the proportion of domestic debt made up 50.2 percent, a five-year high.

 

The president has in the past termed the high national debt as the main cause for him not fulfilling his campaign promises even a he catigates his predecesor Uhuru Kenyatta for borrowing expensive loans.

 

“As we speak today, 65 percent of all the taxes we collect, we use to pay debt… we cannot continue to borrow from others. If we must borrow, let us borrow from our own savings so that we can pay interest to our own savers,” said the president as he was launching the affordable housing project in Nakuru