The International Monetary Fund (IMF) and the government on Tuesday struck a deal that will see the Bretton Woods Institution funnel an additional Ksh 142.8 billion (USD 938 million) loan to Kenya.
An IMF mission led by its Chief to Kenya Haimanot Teferra was in the country from October 30 to November 15 and met President William Ruto at State House on Monday. Fast forward to now, the financial institution stated that the loan is subject to IMF’s management approval and consideration by the Executive Board, which is expected to be completed in January 2024.
According to the deal, Kenya will have immediate access to Ksh103.8 billion (USD 682.3 million).
“I am pleased to announce that the IMF team and the Kenyan authorities have reached a staff-level agreement on (i) the sixth review of Kenya’s economic program under the Extended Fund Facility (EFF) and Extended Credit Facility (ECF) arrangements; (ii) an augmentation of access under the EFF/ECF totaling 130.3 percent of quota SDR 707.3 million, about US$938 million),” stated Haimanot Teferra.
According to the IMF, once the entire amount is disbursed, it will put the entire amount advanced to Kenya to Ksh408.16 billion (US$2.68 billion)
Teferra said the facility will help Kenya navigate the current tough economic times.
The amount will also be instrumental in helping Kenya service its Eurobond loans
“Despite continued commitment to the implementation of the IMF-supported economic program which is broadly on track, uncertainty looms over Kenya’s effective access to international bond markets. This uncertainty is exerting substantial pressure on liquidity, primarily due to the sizeable Eurobond maturing in 2024,” Teferra added.
IMF revealed that Kenya has been mobilizing its development partners to enhance macroeconomic policies and implement structural reforms ahead of June 2024 when the country is expected to service a Eurobond loan.
“Steadfast implementation of a package of mutually reinforcing policies remains key to sustain macroeconomic stability, anchor market confidence, continue to deliver on the program’s objectives, and bolster Kenya’s medium-term prospects,” the IMF Chief of Mission stated.
In its statement, the IMF lauded the Central Bank of Kenya (CBK) for taking steps to modernise the country’s monetary policy framework and improve the functioning of the forex market.
The IMF posed that initiatives like the DhowCSD and other policies taken by the CBK are expected to stimulate the interbank securities market.
On Monday IMF advanced Kenya Ksh83.9 billion to help deal with the effects of climate change.