Kenya to Receive Multi-billion Loan Deal With UAE Next Week

President Ruto with UAE leader at Past Function: Photo Ruto

President Ruto's administration is set to receive Ksh193 billion ($1.5 billion) loan from the United Arab Emirates by the end of next week.

As reported by Bloomberg, Kenya will obtain the specified amount all at once, changing the previous plans to distribute the loan in installments.

The Kenyan government last negotiated with the Middle Eastern country for a loan at an interest rate of 8.2 percent.

President William Samoei Ruto  , alongside UAE President Sheikh Mohamed bin Zayed Al Nahyan: Photo: Ruto

The loan agreement will assist President Ruto's administration in managing its fiscal situation following the GenZ demonstrations of June 2024, during which they entered parliament on June 25th last year, rejecting a series of measures proposed by the government under the Finance Bill 2024.

The measures would have resulted in higher taxes on bread and diapers, generating an additional $2.7 billion in revenue, approximately Ksh259 billion for the government.

The National Treasury is not only indebted to the UAE to address its fiscal deficit; there are also plans for the government to initiate a new loan program with the International Monetary Fund (IMF) just two months before the current program concludes.

"Maybe before the current program comes to a close in April, there should be some indicators of whether we are starting a new program and what that new program will entail," Treasury Cabinet Secretary John Mbadi told Reuters.

"We have the option of taking that... or we go to the market, which is open now, and with our good and positive credit."

The IMF has cautioned the government to reassess its loan agreement with the UAE while it attempts to realign its fiscal and debt objectives. The country anticipates a fiscal deficit of 4.9% of its gross domestic product for the year ending in June, rather than the previously expected 4.3%.