The International Monetary Fund (IMF) has reached a staff-level agreement with Kenya that will provide the East African nation with a loan of approximately $682.3 million, subject to approval by the IMF's Management and Executive Board. This financial assistance is part of a broader strategy to support Kenya's economic growth and sustainability, particularly as the country navigates post-pandemic recovery and prepares to service a significant Eurobond maturing in 2024.
The agreement, announced on Thursday, is the result of the sixth review of Kenya's economic performance under the Extended Fund Facility (EFF) and Extended Credit Facility (ECF) arrangements. If approved, this funding will increase Kenya's total financial support under these facilities to around $4.43 billion. The additional funds are expected to play a crucial role in public finance management, aiding Kenya in meeting its debt obligations.
On July 17, 2023, recognizing the liquidity pressures facing the country, the IMF extended Kenya's EFF and ECF arrangements by ten months. The initial arrangements were set in place in 2021, reflecting a sustained relationship between Kenya and the IMF aimed at fostering economic stability and growth.
Kenyan President William Ruto has assured that despite these liquidity challenges, Kenya will fulfill its debt responsibilities, including repaying an upcoming Eurobond loan next year. The IMF's latest funding agreement boosts this commitment by providing immediate access to $682.3 million and enhancing the lending program by an additional $938 million.
This three-year strategy is instrumental in addressing Kenya's fiscal difficulties and balance of payment issues while supporting its recovery efforts following the COVID-19 pandemic. With the IMF’s executive board's endorsement, Kenya will be able to access an extra $3.88 billion, further solidifying its financial position as it approaches the maturity of a $2 billion Eurobond in June 2024.
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