President Ruto’s efforts to champion global climate change seem to have paid off after Kenya reached an agreement with the World Bank over the disbursement of Ksh66 billion ($500 million) loan.
The issuance of the sustainability-linked bond will see Kenya become the first African country to float such a bond.
According to a World Bank official who spoke to Bloomberg, the bond is expected to be issued in November this year with Kenya planning to use the proceeds to cover the budget deficit.
“Kenya is the ideal country to lead the way both because of a strong commitment, but also because it’s strong government policies toward sustainability,” the World Bank official noted.
The World Bank official affirmed the World Bank's commitment to helping Kenya in developing the sustainability-linked framework and key performance indicators for the bond.
The finance specialist further lauded Kenya for its ambitious sustainability agenda which ranges from climate change to health and energy sectors.
A similar bond had initially been issued by Chile which raised $2 billion last year and also Uruguay. Democratic Republic of Congo could also float a similar bond.
Kenya's Treasury Principal Secretary Chris Kiptoo who is currently attending the International Monetary Fund and World Bank Spring meeting in Washington DC, the United States similarly commented on the country's efforts to champion climate change.
The PS told the meeting that despite Kenya contributing less than 1% of global emissions, the country faces severe impacts like droughts and floods, causing a 3% GDP loss yearly, especially in agriculture, tourism, and energy.
Besides floating the sustainability-linked bond, Kenya also plans to diversify its fund pool through the issuance of new bonds such as the Japanese Samurai bond and the Chinese panda bond.
Kenya also targets Ksh130 billion from the IMF, an amount that will go into buying back part of the 2014 Eurobond that is set to mature in June this year.
The loan agreement was reached following a meeting between the country's Treasury Cabinet Secretary Njuguna Ndung'u and IMF officials.
The meeting was centered around assessing the progress of the Kenya-IMF Program under the Extended Credit Facility and the Resilient Sustainability Facility.
In February, the government announced it had paid part of the Ksh310 billion ($2 billion) bond through the issuance of a new bond worth Ksh233 billion ($1.5 billion).
Following the partial repayments of the loan, Kenya was left with a deficit of $500 million that should be paid before June this year.
