Before June this year, Kenya would have received between $1 billion to $1.5 billion from the World Bank.
The funds will be under Kenya’s Development Policy Operations, said Moody’s in its credit outlook report.
Moody’s says other external financing sources for the country are less certain, but the government has raised funding from the syndicated loan market and could receive additional loans from bilateral creditors.
This would boost Kenya’s international reserve position from around $7 billion currently, or about four months of import coverage.
Kenya Returns to International Markets
Although a return to international bond markets increases financing sources, it is positive in the short term.
Moody’s, however, cautioned that Kenya’s credit profile remains tied to its ability to deliver on planned fiscal consolidation that supports improvements in its debt burden and debt affordability.
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“Given still sizeable external financing needs over the next several years, market access along with multilateral funding will be critical to the government’s continued ability to service its external debt,” said Moody’s.
Kenya has had substantial foreign currency inflows in recent months primarily from multilateral creditors, and also from bilateral and commercial creditors besides the new eurobond issuance
The IMF Executive Board approved the sixth review of Kenya’s Extended Fund Facility and the Extended Credit Facility and the first review of its Resilience and Sustainability Facility, disbursing $624.5 million in January this year.
It also approved the augmentation of Kenya’s existing programs by a total of $941.2 million.
Moody’s also says Kenya will need $3 billion in annual external financing to meet its external debt service needs after 2024.
Kenya’s needs include nearly $2 billion per year owed to private creditors and Chinese bilateral creditors, two groups for which refinancing can come at a higher cost of borrowing and lack predictability.
The country returned to international credit markets in the run-up to its maturing 2024 eurobond, increasing financing sources.
