According to the Central Bank of Kenya, part of the proceeds from a $1.2 billion World Bank loan has been utilized to settle the remaining amount plus accrued interest of $560 million, approximately Sh72 billion, of the 2014 Eurobond. This $560 million was due on June 14th, paid with the final half-yearly interest of $19.25 million for the period ending June 2024.

Background information on the 2014 Eurobond

The 2014 Eurobond was the first for Kenya in the international bond market, and it floated two tenors: five-year, $750 million and ten-year, $2 billion, totaling $2.75 billion, which today, at the current prevailing exchange rate, comes to Shs. 366.7 billion. This settlement closes a very important chapter in Kenya's financial history.

Detailed Breakdown of Settlement

"From the balance of $500m falling due on Monday, we are going to make the payment today, and we have the resources to be able to make the payment for Monday, and that will be the end of the episode for that Eurobond", CBK Governor Kamau Thugge said. The five-year portion of this Eurobond was settled in June 2019, while earlier this year, the government repurchased $1.44 billion worth of the ten-year notes using proceeds from a new issuance.

There had been huge uncertainty in the foreign exchange market before the buyback over how the government would handle the bullet payment at the maturity of the bond. This uncertainty was ratcheting pressure on the Kenyan shilling that saw its exchange rate against the dollar fall to an all-time low of Sh161 in mid-February before the buyback. It has since appreciated and is currently trading at an average of Sh128.63.

Effects of World Bank Loan

"A lot of the risk that people were seeing with the Eurobond evaporated after the buyback as resources became available, and we were expecting money from the World Bank and the International Monetary Fund," said Dr. Thugge. The Treasury could now draw on the $1.2 bn World Bank loan approved at the tail end of May.

Usually, the Treasury sells the proceeds from foreign loans to the CBK for shillings that are then deployed in the domestic economy. In reverse, it buys dollars from the CBK to pay foreign obligations such as public loan repayments. This was reflected in the CBK's official forex reserves, which grew $1.31 billion to $8.32 billion between June 13 and June 20, marking the arrival of the World Bank loan proceeds.

Future Financial Planning

The CBK showed interest in part of these proceeds in settling the Eurobond balance, with the rest expected to support budgetary spending by the government. This strategic allocation is meant to stabilize the country's financial position and support the continued activities of the economy. Currently, the country has been seeing increased pressure from Kenyans to reduce the cost of living via protests seen against the finance bill. The country is also grappling to employ more Junior secondary school teachers to support transition from the old 8-4-4 system to the CBC system. 


The use of the World Bank loan in settling the 2014 Eurobond is termed a milestone in the management of the country's external debt. This strategy, quite successful, dispelled uncertainties in the financial market, strengthened the shilling, and proved that Kenya is committed to keeping its house in order regarding fiscal responsibility for economic stability.