Kenya’s financial markets could be more stable in 2025 due to reduced debt refinancing pressures, according to experts.
This is a complete contrast from the fragile macro-economic environment that was witnessed in 2024 as the country struggled to settle the $2 billion (Sh259 billion) Eurobond that was maturing.
According to the economists, Kenya is showing economic recovery, with the chairman of the President’s Council of Economic Advisers, David Ndii, declaring the country is “out of receivership” and no longer in need of a succession program.
This optimistic outlook coincides with the upcoming conclusion of Kenya’s four-year International Monetary Fund (IMF) program, which is expected to have disbursed over $4 billion (Sh518 billion).
IC Group Senior Research Analyst and Economist Churchill Ogutu said that for Kenya to prevent further impact on its local currency, the state should consider a debt swap before the first instalment of the 2027 Eurobond.
He says that the government’s decision to shelve a switch auction planned for November 2024 raised concerns but left room for flexibility.
“So this year we’re anticipating a $300 million maturity around May thereabouts. So that has been staggered rather than the bullet maturity that we’re expecting in the 2028 Eurobond of $1 billion,” said Ogutu.
“On that point of the anticipated switch auctions, I still expect that the planned switch auction for early 2025 needs to materialise given the very reason you’ve raised around the lumpy maturities we shall be facing at that point.”
Unlike the 2024 Eurobond, the $900 million (Sh116.6 billion) coupon note set to mature in 2027 will not be paid off as a bullet maturity.
Instead, the repayments are staggered for payment over three years. The first installment of $300 million (Sh38.8 billion) is due by May 22, 2025, followed by another $300 million (Sh38.8 billion) by May 22, 2026.
The final $300 million payment will be made by May 22, 2027, completing the obligation.
This approach ensures a more gradual repayment, distributing the financial burden across multiple “So they can now be able to sort of refinance those outsized maturities in April and May, without considerations that they’re still behind the curve. So I think that is what they’re leaning on. Speaking about being ahead of the curve in terms of domestic borrowing, the relief of the exchequer yields has fallen sharply from the highs we saw them sometime last year,” he added.
The IMF program has offered Kenya more than just financial support—it has served as an anchor for international market confidence. While the government has not indicated immediate plans to return to global markets, the economist underscored the importance of maintaining investor trust.
“Even with the program ending, there’s comfort for investors knowing the reforms it initiated will likely continue,” he stated.
However, Kodi Group Africa LLP partner John Kuria says that the stability of the economy will largely depend on the taxation measures instituted by the government in the upcoming 2025 finance bill.
“When you have higher taxation, we have depressed consumption; some industries are contracting in terms of production. Lack of a predictable economy is not making things any better,” noted Kuria.
Kitui Central Member of Parliament Makali Mulu, who is also a member of the budget committee, says that the country should trigger more economic activities by increasing expenditure to trigger consumption.
“This is the time to increase government expenditure and put more
money in the pocket of Kenyans to
increase demand for more goods
and services, that might lead to increased tax collection,” said Mulu.
