2024-01-18 10:56:24
The International Monetary Fund (IMF) announced on Thursday January 18 that it had granted Kenya a loan of 941 million dollars (864 million euros) to help the country strengthen its finances. The IMF said in a statement on Wednesday that its board of directors had approved the loan, with an immediate disbursement of $624.5 million. The total payments under the various credit facilities amount to approximately $2.6 billion, the statement added.
East Africa’s powerhouse, Kenya is grappling with a host of economic challenges, including huge debt, a cost-of-living crisis and a falling currency. Its economy was seriously shaken by Covid-19, then by the shock wave of the war in Ukraine and by a historic drought in the Horn of Africa.
The IMF expects the Kenyan economy to grow by around 5% this year, compared to an estimated 5.1% in 2023. “Kenya’s growth has remained resilient in the face of external and domestic challenges”, said Antoinette Sayeh, Deputy Managing Director and Acting President of the IMF. Credit agreements for Kenya “continue to support the authorities’ efforts to maintain macroeconomic stability, strengthen policy frameworks, resist external shocks, advance key reforms and promote inclusive and green growth.”
New taxes
Kenya’s public debt stands at $65.5 billion, according to the latest National Treasury data, released this month. In December, Kenya abandoned its commitment to buy back part of a large Eurobond maturing in June 2024, worth $2 billion. Instead, Finance Minister Njuguna Ndung’u said the country had paid $68.7 million in interest on the bond, avoiding a possible default.
“In its unwavering commitment to maintaining a resilient sovereign credit rating and facilitating access to new development finance, Kenya remains committed to fulfilling all its obligations to international lenders”said Mr. Ndung’u.
President William Ruto announced in November that the country would repay a first tranche worth $300 million, opening access to a first disbursement from the IMF. To try to reduce its debt, his government prepared a budget – very unpopular among the population and which generated sometimes violent demonstrations – including numerous new taxes supposed to bring in 1.8 billion dollars, to supplement the budget of 22 .3 billion dollars planned for 2023-2024.
Inflation remained high, at 6.6% in December, and, according to the IMF, it might increase slightly in the first half of this year. The Kenyan shilling is also trading at a historic low, around 160 to the dollar.
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