The International Monetary Fund (IMF) has announced the approval of a new loan exceeding $941 million to support the financial stability of Kenya, which is currently grappling with various economic challenges, including high debt, a cost of living crisis, and a devalued currency.
According to a statement released on Wednesday, the IMF’s executive board granted the $941.2 million loan, with an immediate disbursement of $624.5 million. The total payments under different credit facilities are estimated to be around $2.6 billion.
The IMF forecasts Kenya’s economic growth to be approximately five percent in 2024, a slight decrease from the estimated 5.1 percent in 2023. Antoinette Sayeh, IMF Deputy Managing Director, and Acting Chair stated, “Kenya’s growth remained resilient in the face of increasing external and domestic challenges.”
The credit arrangements aim to support Kenya’s efforts in sustaining macroeconomic stability, reinforcing policy frameworks, withstanding external shocks, advancing key reforms, and promoting more inclusive and environmentally friendly growth.
Kenya’s public debt, as per the latest Treasury data released this month, stands at 10.585 trillion shillings ($65.5 billion).
In December, the country opted out of a plan to buy back a portion of a $2 billion Eurobond maturing in June, choosing instead to pay $68.7 million in interest on the bond, avoiding a potential default.
Kenya’s President William Ruto had initially announced a plan in November to buy back $300 million of the Eurobond, citing concerns from citizens, markets, and partners regarding the mounting public debt.
The government has implemented new or increased taxes to replenish its finances, despite facing public resistance due to rising costs of essential goods.
Inflation has been high, reaching 6.6 percent in December, and the IMF anticipates a further increase in the first half of this year. The Kenyan shilling is currently trading at all-time lows, hovering around 160 to the dollar.
