IMF approves new $941m loan for cash-strapped Kenya

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IMF approves new $941m loan for cash-strapped Kenya

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The International Monetary Fund (IMF) has approved a new loan of over $941 million for Kenya to bolster the finances of the cash-strapped East African nation.

Kenya is facing various economic challenges, including a large debt burden, a cost of living crisis, and a weakening currency.

In a statement released on Wednesday, the IMF announced that its executive board had approved the $941.2 million loan, with an immediate disbursement of $624.5 million. The total payments under various credit facilities now amount to about $2.6 billion.

The IMF forecasts Kenya’s economic growth to be around 5 percent this year, slightly down from an estimated 5.1 percent in 2023.

Antoinette Sayeh, IMF Deputy Managing Director and Acting Chair, noted that Kenya’s growth has remained resilient despite increasing external and domestic challenges. The credit arrangements aim to support the country’s efforts to maintain macroeconomic stability, strengthen policy frameworks, withstand external shocks, advance key reforms, and promote inclusive and sustainable growth.

According to recent Treasury data, Kenya’s public debt stands at 10.585 trillion shillings ($65.5 billion). In December, Kenya decided not to repurchase a portion of a $2 billion Eurobond due in June but paid $68.7 million in interest on the bond to avoid a potential default.

Finance Minister Njuguna Ndung’u emphasized Kenya’s commitment to upholding a resilient sovereign credit rating and meeting all debt obligations with international lenders.

In November, President William Ruto announced a plan to buy back $300 million of the Eurobond, citing concerns from citizens, markets, and partners about public debt. To replenish government coffers, Ruto has implemented new or increased taxes, although these measures have faced opposition due to the public’s struggles with rising living costs.