Kenya has successfully issued a $500 million 3-year and 5-year Syndicated Medium-Term Loan facilities, several banks acting as bookrunners and arrangers of the deal said on Thursday.

The proceeds from the loans will be used by the Kenyan National Treasury to finance the development projects as per the development budget approved by parliament for the Fiscal Year 2022/2023, the banks said in a statement issued by the Standard Chartered Bank Kenya Limited. 

"The Government of the Republic of Kenya is pleased with the syndication outcome despite a backdrop of challenging credit market conditions in the emerging markets," the statement said. 

"This achievement signifies continued confidence by investors in Kenya’s economic recovery path."

Citibank, N.A., London Branch, Rand Merchant Bank, a division of FirstRand Bank Limited and the Standard Bank, both of South Africa, Standard Chartered Bank were mandated by Kenya's government for the deal, they said in a statement.

The Africa Export-Import Bank joined the facility as bookrunner for the longer-term tranche.

Kenya's finance minister Njuguna Ndung'u said in his national budget speech on June 15 that the total government expenditure for the year at 3.7 trillion shillings ($27 billion), which the budget committee of parliament stated indicated a lower rise over the previous year when compared to the historical norm.

Ndung'u said the budget deficit for the fiscal year beginning in July 2023/24 is projected at 4.4%. 

He also said the government Ndung'u expects growth to return to 5.5% this year, and that it will pay all debts as they become due, despite a rising debt burden.

Opposition politicians say plans by the government to double the tax on petroleum products to 16%, rising costs of basic commodities such maize flour and cooking oil and restrained revenue collection could restrain economic expansion.

In their statement, the bookrunners said Kenya’s economy - the largest economy in East Africa and a regional financial and transportation hub that is strategic for commercial engagements - has remained resilient, growing at 4.8 percent in 2022 compared to a growth of 7.6 percent in 2021. 

The growth slowdown is attributed to unprecedented two consecutive years of contraction in the agricultural sector due to persistent drought. 

(Editing by Seban Scaria )