According to the latest Africa Outlook 2024 report by the Economist Intelligence Unit (EIU), Kenya is firmly on track to repay its Ksh322 billion (USD2 billion) Eurobond by June this year.
The report, released on January 18, outlines the Kenyan government’s commitment to safeguarding the country’s financial reputation by avoiding a default on this significant debt.
President William Ruto has pledged that Kenya will repay a substantial portion of the Eurobond, totaling Ksh500 billion, between December 2023 and January 2024.
He has also advised the public to brace for tougher economic conditions as the country implements fiscal strategies to manage its debt obligations.
Meeting the Eurobond repayment will likely alleviate some of Kenya’s fiscal challenges, as per the EIU report. After the 2024 payment, Kenya’s next major Eurobond obligations, amounting to US$1.9 billion, are not due until 2027-28, offering some respite from immediate external debt pressures.
“Kenya’s biggest financial event in 2024 is the June 24 timeline to redeem a US 2 billion Eurobond in a single bullet payment, on top of other debt-servicing commitments. Using a combination of tactics, Kenya will strive to avoid a default and the consequent damage to its reputation and will prioritise a timely Eurobond redemption in 2024.
“The sum is large enough to generate legitimate concern, but not so large as to be unmanageable,” the report states in part. “Provided Kenya clears the barrier in 2024, external debt pressures will ease, as the next Eurobond repayments (of US$1.9bn) are not due until 2027-28.”
In a broader context, the EIU report forecasts promising economic growth for Kenya, attributing it to the expected rebound in tourism and the services sector. The report positions Africa, particularly East Africa, as one of the fastest-growing regions globally in 2024.
This growth is anticipated to be driven mainly by the services sector, including the resurgence of the travel and tourism industry and the strength of the transport, logistics, financial, and telecommunications sectors.
Kenya, along with other East African nations like Ethiopia, Uganda, Rwanda, Tanzania, and the DRC, is expected to be at the forefront of this economic expansion.
The Economist Intelligence Unit is the research and analysis division of The Economist publication.
