President William Ruto disclosed on Tuesday, January 30, while speaking in Rome, Italy, that Kenya had opted not to proceed with a Ksh161 billion ($1 billion) syndicate loan offered by the Trade and Development Bank (TDB).
This revelation came shortly after President Ruto advocated for a comprehensive reform agenda for Multilateral Development Banks and called for an increase in concessional loans. Syndicate loans involve multiple lenders merging to provide a single substantial loan. This credit system can be intricate and costly to manage, unlike concessional loans that offer favorable rates, sometimes lower than market value.
Ruto conveyed that his administration was no longer relying on the bank to fulfill the loan agreement reached in October 2023. It’s important to note that before Ruto’s announcement, Kenya had already received Ksh34 billion from TDB.
The declined Ksh161 billion syndicate loan from TDB aimed to bolster Kenya’s foreign reserves and facilitate the settlement of external debts maturing in 2024. Expressing confidence in Kenya’s economic position, Ruto stated that opting for an expensive syndicate loan was no longer deemed necessary.
“Because of the situation that we now see in the market, we believe that it would be a lot easier even for us to raise that money in the market, rather than through syndication,” he remarked, as quoted by Reuters.
A week prior to this decision, the Central Bank of Kenya announced the auction of infrastructure bonds worth Ksh70 billion (USD429 million) intended to finance various development projects.
