NAIROBI, March 27 (Xinhua) -- Kenya's foreign exchange reserves have risen to a record 7.8 billion U.S. dollars or 5.1 months of import cover following disbursement of 800 million dollars syndicated loan.
The drawing of the sum pushed up the dollar reserves from 6.97 billion dollars or 4.61 months of import cover to 7.77 billion dollars, latest Central Bank of Kenya data showed Monday.
The reserves have now peaked to the high levels of 7.8 billion dollars or equivalent to 5.2 months of import cover witnessed in October 2016.
East African nation last week received the loan from four international lenders that include Standard Chartered, Standard Bank and Merchant Bank.
The money would help plug holes on Kenya's over 20 billion dollars budget, with the deficit estimated at 9.7 percent of the gross domestic product for the fiscal year 2016/17.
In January, the government borrowed 750 million dollars through syndicated loans to support the budget and boost foreign reserves, which now brings the total amount borrowed from the foreign market to 1.6 billion dollars since the turn of the year, and may serve to relieve some of the pressure on government to borrow heavily in the domestic market.
Last week, Kenya further signed a 500 million dollars long-term loan agreement with the African Export-Import Bank (Afreximbank) and Trade and Development Bank pushing the country further into debt, which stands at 39 billion dollars.
"The syndicated loan will provide an adequate buffer and aid in the Central Bank's efforts to stabilise the shilling," noted Cytonn, a Nairobi-based investment firm.
The current levels of government debt stand at 55 percent of GDP, with analysts noting they are a potential threat to economic stability.
According to Cytonn, with the global strengthening of the dollar, dollar denominated debt repayments are likely to be more expensive thus exerting adverse effects on Kenya's economic growth.
