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Kenya nears $1.5bn loan from UAE to address budget gap

By Pramod Kumar
Kenya's president William Ruto. A UAE loan will help the East African nations's budget deficit, which is expected to rise to 4.3 percent of GDP this year Reuters/Caitlin Ochs
Kenya's president William Ruto. A UAE loan will help the East African nations's budget deficit, which is expected to rise to 4.3 percent of GDP this year

Kenya is close to securing a $1.5 billion loan from the UAE to address its budget financing gap.

The loan will have an interest rate of 8.2 percent, Reuters reported, citing people familiar with the talks.

“The deal is as good as done,” an unnamed source said, adding that the move will diversify the government’s budget support options.

Kenya’s budget deficit is expected to rise to 4.3 percent of GDP this year, up from an earlier estimate of 3.3 percent, with a delayed International Monetary Fund (IMF) support deal worsening the situation.

In February, Nairobi issued a $1.5 billion seven-year Eurobond, paying an exorbitant 10.375 percent yield. The funds were used to manage its debt maturities.

The East African nation has strengthened its relations with the UAE after president William Ruto took office in September 2022.

In 2018, the UAE loaned Ethiopia $1 billion to handle a hard currency cash crunch.

This year Abu Dhabi sovereign fund ADQ acquired the rights to develop Ras El Hekma in a $35 billion deal with the Egyptian government, aimed at meet Cairo’s liquidity needs.

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