The International Monetary Fund has reached a staff-level agreement with Kenya, allowing for immediate access to $682.3 million(Sh103.7bn) and an increase in the current program’s funding by $938 million(Sh142.6 bn).
In a statement Thursday, IMF said the agreement follows uncertainty regarding Kenya’s access to financial markets, particularly the significant pressure on liquidity stemming from a substantial $2 billion Eurobond maturing in June 2024.
The fund noted that the balance of payments and financial positions of Kenya has been strained by the lingering effects of the COVID-19 pandemic and recurrent droughts induced by climate change. This observation was made after a two-and-a-half-week review mission to Nairobi.
“The authorities’ strong reform program aims to enhance the policy framework substantially and restore confidence to ensure access to the global bond market,” said Haimanot Teferra, who led the IMF team in Kenya.
“Steadfast implementation of a package of mutually reinforcing policies remains the key to sustain macroeconomic stability,” she added.
The IMF’s board will consider the agreement for approval in January.
Pending approval from the Washington-based board, Kenya is set to access to a total of $3.88 billion. This would augment its overall funding under the existing Extended Fund Facility and Extended Credit Facility arrangements to $4.43 billion, as stated by the IMF.
The newly secured IMF financing, coupled with anticipated funds from institutions such as the World Bank and regional entities like Afrexim, is poised to enable Kenya to meet its maturing foreign debt obligations without depleting its hard currency reserves.