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Kenya can repay $2 billion bond, says central bank governor

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Kenya will be able to repay a 2 billion U.S. dollars international bond maturing in June, and the repayment should help the shilling recover from record lows, its central bank governor said on Wednesday.
The East African country is being closely watched to see how it handles the bond due to its growing debt burden, a sharp drop in its currency and uncertainty over its access to financial markets.
Central bank governor Kamau Thugge told a news conference that funds coming in from the World Bank, other multilateral institutions and regional banks were sufficient to repay the bond.
“This risk of the Eurobond will in my view be completely eliminated. And that should also contribute to a strengthening of the shilling,” he told reporters, a day after the central bank raised its benchmark lending rate for the second meeting in a row.
The shilling weakened more than 20 percent against the U.S. dollar last year and has fallen further this year.
“It is my view now that the exchange rate has overshot the equilibrium rate. So there could be scope for the central bank to support the exchange rate going forward,” Thugge said.
In the past, the central bank has said it has no preferred rate for the shilling and only intervenes to reduce volatility.
Thugge said the shilling could also draw support from inflows from overseas lenders and higher interest rates.
Kenya has received disbursements totalling just over 1 billion U.S. dollars in the last two months and expects to get another 1.5 billion U.S. dollars from the World Bank between March and May, he said.
He added that the economy was forecast to grow 5.7 percent this year versus 5.6 percent last year. In December, the central bank predicted growth in 2024 of 5.9 percent.
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