NAIROBI (Reuters) -Kenya has already started talks with International Monetary Fund officials to secure a new lending program when the current one expires in April, its finance minister told Reuters on Wednesday.
The East African nation needs continued support from the Washington, D.C.-based lender to keep its economy on track, Finance Minister John Mbadi said in an interview.
Kenya’s debt-servicing costs have surged due to a borrowing spree over the past decade, while it abandoned a plan to raise revenue via tax hikes last year in the wake of deadly protests.
“Maybe before the current program comes to a close in April, there should be some indicators whether we are starting a new program and what that new program will entail,” he said.
A $1.5 billion commercial loan from the United Arab Emirates, at an 8.25% interest rate, was still an option for the government to fund its budget this fiscal year, he said, but they are also considering other sources, including issuing a Eurobond.
“We have the option of taking that… or we go to the market which is open now, and with our good and positive credit,” he said.
The decision by the administration of U.S. President Donald Trump to freeze foreign aid could hit Kenya hard, as it lacks the fiscal space to replace the funding, Mbadi said, adding that he hoped the United States would reconsider.
“We don’t have that fiscal space… We will have to rearrange the budget and rechannel the domestic resources,” he said.
(Reporting by Duncan Miriri, editing by Libby George and Hugh Lawson)
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