Kenya is set to receive a $1.5 billion loan from the United Arab Emirates (UAE) by the end of next week, according to sources cited by Bloomberg. The funding is part of President William Ruto’s efforts to stabilize the nation’s economy following the withdrawal of planned tax increases that were expected to raise $2.7 billion. The controversial tax measures were scrapped after widespread protests turned deadly, forcing the government to seek alternative financing options.
Initially intended to be disbursed in multiple installments, the loan will now be issued in a single tranche, sources familiar with the negotiations revealed. Kenya’s Finance Minister, John Mbadi, previously confirmed the country’s request for the loan, noting that it carries an interest rate of 8.25% over a seven-year term. He highlighted that this rate is more favorable than the 10.7% interest Kenya would face with a Eurobond issuance.
The loan is expected to strengthen Kenya’s foreign exchange reserves as the country prepares for talks with the International Monetary Fund (IMF) to establish a new financial arrangement. Kenya’s current $3.6 billion program with the IMF expires on April 1.
In parallel, the government has revised its fiscal deficit forecast for the current financial year, raising it to 4.9% of gross domestic product (GDP) from the earlier estimate of 4.3%, reflecting the challenges in balancing public finances amid economic pressures.
