Nairobi, Feb. 14 -- The Treasury has flagged the risk of further weakening of the Kenya shilling, dollar shortages and increased debt as Kenya struggles to raise an extra Sh160 billion to clear the outstanding Eurobond debt.

In a preliminary circular offered, the Treasury says its options of tapping local forex reserves or issuing a dollar-denominated domestic bond to repay the Eurobond balance look set to trigger a shortage and further depreciation of the shilling.

Kenya plans to issue a new Eurobond of an indicative figure of $1 billion, with the proceeds used to buy back the bonds held by the investors of the $2 billion (Sh317 billion) Eurobond maturing in June.

But the balance, should Kenya only raise half of the total repayment am...