Kenya will this month issue a KSh175 billion securitised bond to finance the construction of key road infrastructure, Treasury Cabinet Secretary(CS) John Mbadi announced on Tuesday.
The long-awaited bond will be backed by a road maintenance levy component embedded in the retail price of fuel.
The government has already secured a KSh12 billion syndicated loan against the expected proceeds from the bond, as part of efforts to mobilize funds for ongoing and new infrastructure projects.
Mbadi said the National Treasury will also hold follow-up meetings with the International Monetary Fund (IMF) to discuss a potential new financing programme, expressing optimism that an agreement will be reached on how the securitised debt will be treated.
“We are confident that we will find common ground with the IMF regarding the classification of the securitised bond. This is a creative and sustainable way of funding projects without adding pressure to our existing debt stock,” Mbadi stated.
Kenya has increasingly turned to revenue securitisation borrowing against future income streams such as levies to finance critical development projects amid concerns over rising public debt.
The government argues that this strategy enables it to raise capital without inflating the national debt burden.However, the IMF maintains that such borrowing should still be considered part of the country’s public debt portfolio.
“The discussions are ongoing, and we believe a mutual understanding will be reached,” Mbadi added.Kenya’s previous KSh465 billion ($3.6 billion) IMF programme expired earlier this year.
Government officials have since expressed interest in negotiating a new facility that would include both lending and technical support components to bolster fiscal stability and infrastructure development.
