President Uhuru Kenyatta is seeking a new Ksh106 billion loan, eight months to his retirement from office as the Head of State.
Treasury, under Cabinet Secretary Ukur Yatani, is set to issue a green light allowing the government to float a fifth Eurobond in the 2022/2023 Financial Year.
In the draft 2022 Budget Policy Statement, Treasury noted that it is seeking the sovereign bond as the framework for its issuance and availability were in order.
The loan will fund Uhuru’s successor in their first budget in office. The fifth President is expected to be elected into office in August 2022, two months after 2022/2023 budget is read.
Treasury wants to use the Ksh106 billion sovereign bond to cover deficits in the 2022/2023 budget and fund Kenya’s green energy projects.
“In recognition of the serious threats posed by climate change, the government will deliver on the climate agenda through a focus on some the following interventions in the fiscal year 2022/23, tapping into green financing by issuing the first Sovereign Green Bond to finance green and climate-related projects and programmes,” the National Treasury proposed.
During the recently concluded #COP26 Global Climate Summit in Glasgow, Scotland, Uhuru announced that Kenya will fully transition to green energy by 2030. The President detailed that his administration had developed a plan to maintain low carbon emissions.
“We are on course to achieve our target of 100 per cent use of clean energy by 2030 and to achieve 100 per cent access to clean cooking by 2028," President Kenyatta stated, noting that Kenya’s use of renewable energy accounts for 73 per cent of the country’s installed power generation capacity.
Geothermal, wind, solar and hydro-electric installations contribute to 90 per cent of electricity. Plans to borrow a green bond had previously been hampered by a lack of clear framework and regulations.
Kenya faced challenges in explaining how the loan would be used. The money will only be used to fund Kenya’s green projects from solar power, electric vehicles and bus rapid transport (BRT) that will operate along Thika Road and Waiyaki Way.
None of the funds will be used to cover the government’s recurrent expenditure. The loan will be Kenya’s fifth Eurobond since Uhuru and Deputy President William Ruto were elected into office in 2013.
The Jubilee administration has already accumulated over Ksh880 billion in Eurobond in the last seven years. The fifth Eurobond, amounting to Ksh112 billion was raised in June this year.
Kenya also received monies from the World Bank and a Ksh255 billion loan from the International Monetary Fund (IMF). The IMF loan was issued in instalments.
On Friday, November 5, IMF allowed Kenya to withdraw Ksh29.4 billion from the Ksh255 billion loan it issued in April 2021.
