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IMF Approves New $941m Loan for Cash Strapped Kenya

The International Monetary Fund has granted Kenya a new loan of more than $941 million to assist strengthen its finances.

Kenya is dealing with a slew of economic issues, including a massive debt mountain, a cost-of-living crisis, and a falling currency.

In a statement issued on Wednesday, the IMF’s executive board approved the $941.2 million loan, with a $624.5 million disbursement due immediately.

The Washington-based agency said it forecast Kenya’s economic growth at around 5 percent this year, from an estimated 5.1 percent in 2023.

“Kenya’s growth remained resilient in the face of increasing external and domestic challenges,” said Antoinette Sayeh, IMF deputy managing director and acting chair, said in the statement.

The credit arrangements for Kenya “continue to support the authorities’ efforts to sustain macroeconomic stability, strengthen policy frameworks, withstand external shocks, push forward key reforms, and promote more inclusive and green growth”.

According to the latest Treasury data released this month, Kenya’s public debt stands at 10.585 trillion shillings ($65.5 billion).

In December, Kenya ditched a promise to buy back a portion of a $2 billion Eurobond that is due to mature in June.

Instead, Finance Minister Njuguna Ndung’u said the country had paid $68.7 million in interest on the bond, sidestepping a potential default.

“In its unwavering commitment to upholding a resilient sovereign credit rating and facilitating access to new development financing, Kenya remains dedicated to fulfilling all debt obligations with international lenders,” Ndung’u said.

In November, President William Ruto announced an intention to purchase $300 million in Eurobonds, stating that state debt had “become a source of much concern to citizens, markets, and our partners”.

Ruto has imposed a slew of new or increased taxes in an effort to replenish government coffers, but they are highly unpopular among people grappling with rising basic goods prices, and some have been challenged in court.

Written by PH

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