IMF GRANTS KENYA A LOAN OF Ksh 142.8 BILLION
The International Monetary Fund has reached a staff-level agreement with Kenya, unlocking immediate access to a $682.3 million tranche and boosting the current lending programme by $938 million, the fund said on Thursday.
The East African nation is grappling with acute liquidity challenges caused by uncertainty over its ability to access funding from financial markets before a $2 billion Eurobond matures next June
Its balance of payments and financial positions have also been strained by the legacy of the COVID-19 pandemic and frequent climate change-induced droughts, the fund said at the conclusion of a two-and-a-half week review mission to Nairobi.
“The tightening global financing conditions for frontier economies and global geopolitical tensions are compounding the challenges,” said Haimanot Teferra, the head of the mission.
The mission’s chief, Haimanot Teferra, stated, “Global geopolitical tensions and tightening global financing conditions for frontier economies are compounding the challenges.”
Kenya will have access to a total of $3.88 billion, subject to the executive board of the Washington-based fund’s approval. This would increase Kenya’s total funding under the current Extended Fund Facility and Extended Credit Facility arrangements to $4.43 billion, according to the IMF.
The current programme, agreed in April 2021, was first bumped up in May by an extra $1 billion, including $544 million under the IMF’s Resilience and Sustainability Facility (RSF), and a new arrangement under the same RSF.
Kenya’s international bonds showed little immediate reaction to the news.
At 0710 GMT, some had slipped less than 0.1 cents on the dollar in price , while others had increased slightly in price , according to Tradeweb data.
Although the deal was widely expected after it was telegraphed by a senior adviser in Kenya’s presidency, it was still being viewed positively, said a Kenyan market participant who did not wish to be named.
Kenya would be able to pay off maturing foreign debt without depleting its hard currency reserves thanks to the fresh IMF finance, as well as anticipated funding from the World Bank and regional banks like Afrexim, the market participant stated.
“Kenya will eventually gain some credibility,” the market participant said.