William Ruto's Govt Plans To Borrow Over KSh 193.5b From UAE In Budget Support

• The government was forced to look for alternative revenue sources after President William Ruto withdrew the rejected Finance Bill 2024
• Ruto's administration held talks with the United Arab Emirates (UAE) to secure over KSh 193.5 billion for the fiscal year 2024/25
• The move was accelerated following disbursement delays from the International Monetary Fund (IMF) since June 2024

TUKO.co.ke journalist Wycliffe Musalia has over five years of experience in financial, business, and technology reporting and offers deep insights into Kenyan and global economic trends.

President William Ruto's administration is keen to secure a loan from the United Arab Emirates to seal its budget deficit.

How much is Kenya's budget deficit?

Kenya sought to borrow over KSh 500 billion in the Financial Year 2024/25, comprising KSh 333.8 billion and KSh 263.2 billion from external and domestic creditors, respectively.

Treasury presented a KSh 3.9 trillion budget statement to parliament in June 2024 that aimed to raise KSh 3.343 trillion from total revenue collections, including aid appropriations.

However, the withdrawal of the Finance Bill 2024 saw the budget deficit increase by KSh 200 billion, which Ruto seeks to cut.

How much does Kenya want to borrow from UAE?

According to NTV Kenya, the government could soon close a $1.5 billion (KSh 193.5 billion, according to the current foreign exchange rate) loan deal with the United Arab Emirates.

The loan amount is expected to be issued at an interest rate of 8.2% per year.

A source privy to the matter revealed that the “deal is as good as done" as the country seeks to diversify its revenue for budget support.

Reuters reported that Kenya and UAE concluded a comprehensive economic partnership agreement (CEPA) in 2022.

Why Kenya seeks more budget funding

Ruto's government has been struggling to finance the 2024/25 budget after its revenue-raising measures were shuttered.

The International Monetary Fund (IMF) disbursement delay is another glaring factor that pushes the Kenya Kwanza administration to look for extra funding.

In August 2024, US Ambassador Meg Whitman revealed that the Bretton Woods institution halted its June disbursement to Kenya following the nationwide anti-government protests.

Whitman noted that the international lender required revenue-raising measures and numbers to approve the disbursement.

Proofreading by Otukho Jackson, a multimedia journalist and copy editor at TUKO.co.ke