Kenya has secured a significant financial boost after reaching a staff-level agreement with the International Monetary Fund (IMF).
This agreement paves the way for the disbursement of approximately $976 million to the East African nation.
According to a recent statement by the IMF, approval of a second review for Kenya’s Resilience and Sustainability Facility (RSF) would grant the country immediate access to an additional $120 million.
The IMF also urged Kenya to revise its 2024/25 budget to generate more revenue, as a worsening in the primary fiscal balance in the previous financial year and a tax collection shortfall was expected to keep domestic borrowing needs high.
Although Kenya has been facing liquidity challenges since 2022, it managed to sell a new $1.5 billion Eurobond from international markets in February, albeit at a steep price, to partly buy back another Eurobond that is maturing in June.
The issuance assuaged investor concerns about a potential default, restored foreign investors confidence in the economy and caused the shilling currency to strengthen against the dollar.
The IMF expressed optimism about Kenya’s fiscal adjustments for 2024/25 could remedy the situation.
“Authorities have taken decisive steps towards fiscal consolidation by introducing several measures in the context of the draft 2024/25 Budget and the 2024 Finance Bill,” it added.
The finance minister is due to present the 2024/25 (July-June) budget to parliament on Thursday.
Kenya’s Parliament approved higher spending for the current fiscal year ending in June 2024. The total budget approved is 4 trillion Kenyan shillings ($31 billion), which represents an increase from the 3.75 trillion shillings the minister presented last June for the 2023/24 year. That budget was later adjusted to 3.85 trillion shillings.
The 2024/25 budget will be accompanied by the Finance Bill 2024, a separate law outlining revenue-raising proposals which some critics say some could cripple sectors including financial services, transport, manufacturing and retail.
Kenya’s current IMF deal, which is for a total of $3.6 billion, was agreed in April 2021. The current review is the seventh under the program.
Last week, the central bank governor said Kenya will use part of a $1.2 billion World Bank budget support loan to make a payment of roughly $500 million on a Eurobond maturing this month.
Follow us on:
New Zealand has rejected the Cook Islands’ proposal for a separate passport, requiring full independence…
Honda and Nissan plan a merger to create the world’s third-largest automaker, aiming to finalise…
Trump has selected ex-bank president Mauricio Claver-Carone as Latin America envoy, despite past misconduct allegations…
Trump has demanded Panama reduce Canal fees or return it to US control, sparking backlash…
Australia has approved the extradition of ex-marine Daniel Duggan, facing US charges for allegedly training…
Donald Trump has selected businessman Tilman Fertitta, owner of the Houston Rockets, to serve as…