The International Monetary Fund (IMF) has approved a loan of over $941 million for Kenya to boost the country’s economic resilience. Kenya is currently facing various economic challenges, including a significant debt burden, a cost of living crisis, and a depreciating currency. The IMF’s executive board announced the approval of the loan on Wednesday, with an immediate disbursement of $624.5 million. The total payments under different credit facilities are estimated to be about $2.6 billion. Despite the challenges, the IMF forecasts Kenya’s economic growth to be around 5% this year. Antoinette Sayeh, IMF Deputy Managing Director and Acting Chair, highlighted Kenya’s resilience in the face of adversities and emphasized that the credit arrangements would support the government’s efforts to sustain macroeconomic stability, implement policy frameworks, withstand external shocks, pursue key reforms, and promote inclusive and environmentally-friendly growth.
Notably, Kenya’s public debt currently stands at 10.59 trillion shillings ($65.5 billion). Earlier, the country had decided against buying back a portion of a $2 billion Eurobond set to mature in June. Instead, the Finance Minister, Njuguna Ndung’u, confirmed the payment of $68.7 million in interest on the bond to avoid potential default. Ndung’u affirmed Kenya’s commitment to meeting all debt obligations with international lenders to maintain a resilient sovereign credit rating and facilitate access to new development financing. In line with this, President William Ruto had previously announced a plan to purchase $300 million of the Eurobond, acknowledging concerns from citizens, markets, and partners regarding public debt.
To replenish government coffers, Ruto imposed various new or increased taxes. However, these measures have faced significant opposition from citizens struggling with rising costs for essential goods, leading to legal challenges against several taxes. It is worth mentioning that this loan from the IMF aims to support Kenya in overcoming its economic challenges and implementing necessary reforms. The country’s government remains dedicated to fulfilling its debt obligations while striving for sustainable economic growth.
In conclusion, the IMF’s approval of a $941.2 million loan for Kenya will provide a vital boost to the country’s efforts to address economic challenges and enhance financial stability. The loan, with an immediate disbursement of $624.5 million, will aid in sustaining macroeconomic stability, implementing necessary reforms, and promoting inclusive and green growth. Kenya’s commitment to meeting debt obligations and pursuing resilient economic policies remains unwavering, despite the cost of living crisis and debt burden. The loan is expected to contribute to Kenya’s economic growth, which is predicted to reach around 5% this year.
