Kenya signs $800 million syndicated loans to plug widening budget deficit

Kenya’s government has signed with four international banks to raise $800 million in syndicated loans that authorities say will boost foreign-currency reserves and plug a widening budget deficit.

The East African nation’s Treasury signed the agreements with Standard Chartered bank, Citibank, Rand Merchant bank and Standard Bank.

Kenya plans to raise 154 billion shillings ($1.5 billion) through external borrowing in the current budget year that ends June 30.

It has already secured $250 million from lenders led by PTA Bank, an East African trade-finance lender based in Burundi.

The World Bank has estimated Kenya’s financing gap at 9.6 percent of gross domestic product in the 2016-17 financial year, from 7.2 percent in 2015-16.

President Uhuru Kenyatta, who faces re-election in August, has raised Kenya’s borrowing since taking power in April 2013.

He has however dismissed criticism of the higher borrowing and says it is needed to fund development in the east African nation.