NAIROBI (Reuters) - Kenya is talking to lenders about a plan to issue a $2.5 billion eurobond denominated either in euros or dollars, a banking source said on Wednesday.

In the government's 2018/19 (July-June) budget approved by parliament in September, Finance Minister Henry Rotich set a net external financing target of 287 billion shillings ($2.83 billion) to partly cover the deficit.

"They want to assess whether it would be cheaper to borrow in euros or dollars. A number of banks submitted their interest last week, their technical capabilities," the source told Reuters.

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There has been an increase in government borrowing since President Uhuru Kenyatta came to power in 2013 - a rise that has angered some opposition politicians who say it is saddling future generations with debt.

($1 = 101.5300 Kenyan shillings)

(Reporting by Duncan Miriri; Editing by Andrew Heavens)