Kenya gets nod for Sh100 billion fresh IMF loan
Kenya gets nod for Sh100 billion fresh IMF loan
The International Monetary Fund (IMF) announced on Thursday that it has secured a provisional agreement with Kenya, allowing for the immediate disbursement of $682.3 million (KES 103.85 billion). The country has also secured an augmentation of the current program's funding by $938 million (142.76 billion).
The IMF noted that uncertainty surrounding Kenya's ability to access financial markets had been placing significant strain on liquidity. This was primarily attributed to the impending maturity of a substantial Eurobond, valued at $2 billion and set to mature next year.
Haimanot Teferra, the head of the IMF's Kenya mission, explained, "The tightening global financing conditions for frontier economies and global geopolitical tensions are compounding the challenges from the legacy of the pandemic and multi-season drought, further straining Kenya’s balance of payments and fiscal financing requirements. The authorities’ strong reform program aims to enhance the policy framework substantially and restore confidence to ensure access to the global bond market."
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Fiscal stance
The IMF highlighted that a tighter fiscal stance is envisaged under the program to help reduce debt vulnerabilities and achieve a debt-to-GDP ratio of 55 percent by 2029. This will entail timely implementation of reforms to broaden the domestic tax base and improve tax compliance.
Subject to approval by the IMF's executive board, Kenya stands to gain access to a total of $3.88 billion. This injection would raise the cumulative funding under the existing Extended Fund Facility and Extended Credit Facility arrangements to $4.43 billion.
Included in this sum is a fresh augmentation to Kenya's access within the financing program, totaling $938 million. In May, the facility had already received a boost of an additional $1 billion, comprising $544 million from the Resilience and Sustainability Facility (RSF) and a novel arrangement under the same RSF.
