Government borrows Sh416 billion through Eurobond, external loans in four months
The borrowing was made up of a sovereign bond issued in the international market and seven loan agreements signed with development partners and financial.
National Treasury buildings. PHOTO/@KeTreasury/X
The government borrowed more than Sh416 billion in new external financing within four months, with the funds expected to support budget operations, debt management and development projects in education, affordable housing, climate resilience and energy.
According to a report presented to parliament by the National Treasury, the borrowing was made up of a sovereign bond issued in the international market and seven loan agreements signed with development partners and financial institutions between January and April 2026.
The report on all new loans contracted by the government was prepared in line with Section 31 (3) of the Public Finance Management Act, CAP 412 A, which requires the Cabinet Secretary to provide Parliament with details of new loans obtained from outside Kenya or denominated in foreign currency.
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According to the Treasury, the largest borrowing during the period was a $2.25 billion (about Sh291.5 billion) International Sovereign Bond issued on February 26, 2026, between Citibank Europe plc Germany Branch as the lender and the Government of Kenya as the borrower.
The bond was divided into two tranches, with $1.35 billion issued under one tranche and $900 million under the second tranche.
The $1.35 billion tranche will be repaid in three equal instalments of $450 million on February 26, 2037, February 26, 2038 and February 26, 2039.
The $900 million tranche will be repaid in two equal instalments of $450 million, with the first payment scheduled for February 26, 2033 and the final payment on February 26, 2034.
The report noted that the $1.35 billion notes will attract an interest rate of 8.70 per cent per year, while the $900 million notes will attract 7.875 per cent per year on the outstanding principal amount.
“The amount of the loan is approximately $2.25 billion, equivalent to Sh291.48 billion and will be repaid in dollars. The ISB was split into two tranches, one at $1,350 million and $900 Million,” reads the Treasury report.
The government said the proceeds from the bond will be used for liability management operations and budget support.
The government also secured seven external loans worth about Sh161 billion to finance programmes in education, housing, climate action and general budget support.
The loans include a UA55.16 million (about Sh9.8 billion) facility from the African Development Fund to support the Higher Education Science and Technology Phase II project, aimed at improving access to quality training and research in STEM.
“The project is to impose relevance and equitable access to quality higher education training and research in STEM for inclusive economic growth and employment in Kenya by 2030,” reads the report.
The Treasury also secured a $225 million (about Sh29.1 billion) loan from the International Development Association (IDA) for the Primary Education Equity in Learning Programme to reduce regional differences in learning outcomes, improve retention of girls in junior school and strengthen education systems.
Another $30 million (about Sh3.9 billion) IDA loan will support locally led climate resilience actions and strengthen the ability of county and national governments to manage climate risks.
In the housing sector, the government secured financing under the Housing Finance, Lands and Sustainable Investments Project, including $168 million and $182 million loans from IDA, as well as a separate $125 million loan from the International Bank for Reconstruction and Development (IBRD).
The funds will support affordable housing finance, improve property registration and contribute to job creation.
“The project aims to expand access to affordable housing finance, improve property registration and support job creation,” the Treasury said.
The government also obtained a JPY25 billion (about Sh20.3 billion) loan from Sumitomo Mitsui Banking Corporation International under the NEXI Samurai Loan Facility.
The financing will support general budget funding, implementation of the National Automotive Policy and reduction of energy losses.
The Treasury said the new financing supports the Bottom-Up Economic Transformation Agenda and will fund investments aimed at promoting economic growth while expanding access to public services.