NAIROBI, June 6 (Reuters) – Kenya plans to use part of a World Bank budget support loan to make a payment of roughly $500 million on a Eurobond maturing this month, its central bank governor said on Thursday.

The East African country sold a $1.5 billion international bond in February at great cost to fund the buyback of a large portion of the $2 billion bond maturing in June.

Before that, investors had feared Kenya might not be able to repay the bond due to its strained public finances.

“We do expect some disbursements from the World Bank of about $1.2 billion related to the development policy operations. Part of that … will be used to settle the $500 million of the remaining Eurobond,” Central Bank of Kenya Governor Kamau Thugge told a news conference.

Asked about a World Bank report that said the government was planning another buyback later this year, Thugge said the bank was still in discussions with the Treasury.

He said the central bank was sticking to its economic growth forecast of 5.7% this year, despite recent flooding, as the services sector was resilient and agriculture performing well.

Kenya’s economy is estimated to have grown 5.8% in the first quarter of this year, after 2023 growth of 5.6%.

On Wednesday, the central bank held its benchmark lending rate KECBIR=ECI at 13.0%, saying the current stance would ensure that inflation remained stable around the mid-point of its target range in the near term.

In response to a questions about when rates would go down, Thugge said the bank would look at external developments before deciding what direction its benchmark rate would take at the appropriate time.

(Reporting by George Obulutsa; Editing by Alexander Winning)