Treasury to tap Central Bank’s IMF dollar reserves for budget
The Treasury will borrow up to Sh41.8 billion from the dollar reserves the Central Bank of Kenya (CBK) received from the International Monetary Fund (IMF) in form of special drawing rights (SDR) in August.
The government told the IMF that it wants to utilise part of the funds locally and would borrow half of the SDR allocation from the CBK in local currency, which it will repay in 30 years.
The funds were allocated to Kenya as part of the multilateral lender’s bailout to all countries in the world — to ease the balance of payment constraints for Covid-19-hit economies.
In the programme, Kenya received $740 million (Sh83.7 billion), boosting foreign reserves.
“In addition to resources made available from the World Bank (Covid-19 loan), half of Kenya’s SDR allocation ($370 million SDR) will be on-lent in domestic currency by the CBK,” said the IMF in a report on the Article IV consultations.
“The baseline projection assumes that half of the allocation is on-lent by the CBK to the government in the form of 30-year domestic claim with a bullet maturity carrying an interest rate equal to the Kenya shilling equivalent of the average SDR rate over 2021–51.”