IMF Boosts Kenya with Extra Ksh 142.8B Fund Injection
Thursday, the International Monetary Fund announced that it and Kenya have reached an agreement at the staff level, which will grant the country immediate access to a $682.3 million tranche and an additional $938 million to its current lending program.
The East African country is currently facing significant liquidity difficulties as a result of apprehension regarding its capacity to obtain financing from financial markets before the June maturity of a Eurobond worth $2 billion.
The legacy of the COVID-19 pandemic and frequent droughts caused by climate change have also strained its financial and balance of payments positions, the fund reported after a two-and-a-half-week review mission to Nairobi.
“The tightening global financing conditions for frontier economies and global geopolitical tensions are compounding the challenges,” said Haimanot Teferra, the head of the mission.
Kenya will be granted an additional $3.88 billion, contingent upon the endorsement of the executive board of the Washington-based fund. This would bring the country’s cumulative funding under the Extended Fund Facility and Extended Credit Facility agreements to $4.43 billion, according to the IMF.
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The initial $1 billion increase to the April 2021-agreed-upon program occurred in May, and it included $544 million from the Resilience and Sustainability Facility (RSF) of the International Monetary Fund (IMF) and a new arrangement under the same RSF.
The international bonds of Kenya exhibited a minimal instantaneous response to the news.
Some had decreased in value by less than 0.1 cents per dollar as of 07:10 GMT, while others had increased marginally, according to data from Tradeweb.
Despite the deal’s widespread anticipation following its telegraph by a senior adviser in Kenya’s presidency, a Kenyan market participant who declined to be identified stated that it was still being received favorably.
The market participant stated that the new IMF financing, in conjunction with anticipated funds from the World Bank and regional institutions such as Afrexim, would enable Kenya to repay maturing foreign debt without depleting its hard currency reserves.
“Kenya will sort of become a bit more creditworthy,” said the market player.
IMF Boosts Kenya with Extra Ksh 142.8B Fund Injection
