By Rédaction Africa Links 24 with RFI
Published on 2024-01-18 11:03:22
The International Monetary Fund has approved a new loan of more than $941 million to assist Kenya in addressing its financial challenges. The East African nation is currently facing economic difficulties, including a significant debt burden, an increase in the cost of living, and a declining currency.
In a statement released on Wednesday, the IMF stated that its executive board had given the green light for the $941.2 million loan, with an immediate disbursement of $624.5 million. This loan adds to the total payments under various credit facilities, amounting to approximately $2.6 billion. Despite these challenges, the IMF forecasts Kenya’s economic growth to be around 5 percent for the year, slightly lower than the estimated 5.1 percent in 2023.
Antoinette Sayeh, IMF Deputy Managing Director and Acting Chair, commended Kenya’s resilience in the face of increasing external and domestic challenges. She emphasized the ongoing support provided by the credit arrangements, aimed at sustaining macroeconomic stability, strengthening policy frameworks, withstanding external shocks, pushing forward key reforms, and promoting more inclusive and green growth.
According to the latest Treasury data, Kenya’s public debt stands at 10.585 trillion shillings ($65.5 billion). In December, the country opted to pay $68.7 million in interest on a $2 billion Eurobond that is due to mature in June, instead of following through on a promise to repurchase a portion of the bond.
In an effort to fulfill debt obligations and facilitate access to new development financing, Finance Minister Njuguna Ndung’u reaffirmed Kenya’s commitment to upholding a resilient sovereign credit rating. President William Ruto had previously announced a plan to buy back $300 million of the Eurobond, acknowledging concerns regarding the rising public debt.
To address the financial challenges, Ruto has introduced new or increased taxes, although these measures have faced resistance due to the population’s struggle with rising living costs. Inflation has been on the rise, reaching 6.6 percent in December, and the Kenyan shilling is trading at all-time lows against the dollar. Despite these difficulties, Kenya remains dedicated to fulfilling its debt obligations and pursuing economic stability.
Read the original article on RFI
