Kenya gets $938m more from IMF ahead of Eurobond due date
The International Monetary Fund (IMF) has reached a staff-level agreement with Kenya, unlocking immediate access to a $682.3 million tranche and bolstering the current lending program by $938 million, as announced on Thursday.
Pending approval from the executive board of the Washington-based fund, Kenya is set to gain access to a total of $3.88 billion. This additional funding will increase Kenya's total support under the existing Extended Fund Facility and Extended Credit Facility arrangements to $4.43 billion, according to the IMF.
The ongoing program, initially agreed upon in April 2021, witnessed its first expansion in May with an additional $1 billion injection. This included $544 million under the IMF's Resilience and Sustainability Facility (RSF) and a new arrangement under the same RSF.
Kenya is contending with acute liquidity challenges, stemming from uncertainty about its ability to access funding from financial markets before a $2 billion Eurobond matures next June. The nation's balance of payments and financial positions are strained by the lingering impact of the COVID-19 pandemic and recurrent climate change-induced droughts, as highlighted by the International Monetary Fund (IMF) at the end of a two-and-a-half-week review mission in Nairobi. Following the announcement of a staff-level agreement with the IMF, Kenya's international bonds experienced modest increases, with the $2 billion note maturing in June 2024 showing the most significant rise—a 0.43 cents increase to 95.6 cents at 09:28 GMT. While the agreement was largely anticipated, its confirmation was viewed positively, according to a Kenyan market participant who preferred not to be named. The new IMF financing, combined with expected funds from the World Bank and regional institutions like Afrexim, is expected to enable Kenya to meet maturing foreign debt obligations without depleting its hard currency reserves, providing some relief in navigating its challenging economic landscape.