Kenya : IMF lends $941 million to Nairobi to overcome major economic challenges
The International Monetary Fund (IMF) has approved a loan of $941 million for Kenya, as stated in a press release on Thursday, January 18. An immediate disbursement of $624.5 million aims to bolster the country’s finances, which are grappling with various economic challenges, including significant debt, a cost-of-living crisis, and currency depreciation.
Kenya, often considered the economic powerhouse of East Africa, has been severely impacted by the consequences of Covid-19, the repercussions of the war in Ukraine, and a historic drought in the Horn of Africa.
The country’s public debt stands at $65.5 billion, and the IMF forecasts economic growth of around 5% in 2024, slightly below the estimated 5.1% for 2023. Antoinette Sayeh, Deputy Managing Director and Acting Chair of the IMF, highlighted Kenya’s economic growth resilience in the face of internal and external challenges.
The credit agreements between the IMF and Kenya aim to support the authorities’ efforts to maintain macroeconomic stability, strengthen policy frameworks, withstand external shocks, promote key reforms, and foster inclusive and sustainable growth.
Kenya’s public debt has been a concerning issue, leading to unpopular budget adjustments, including new taxes. The Kenyan government has committed to fulfilling its obligations to international lenders, and in December, chose to pay $68.7 million in interest on a Eurobond rather than redeem a significant portion due in June 2024.
Despite these efforts, inflation remains high, at 6.6% in December, and the value of the Kenyan shilling has reached a historic low, trading around 160 to 1 dollar. Kenyan President William Ruto announced in November the repayment of an initial tranche of $300 million, paving the way for this IMF loan.
