President William Ruto said Kenya anticipates receiving approval from the International Monetary Fund (IMF) for a $1 billion transfer next month. This would support the country’s improving economy following its successful containment of a debt crisis earlier this year.
Since the government issued a $1.5 billion Eurobond in February to allay market fears over a probable default on a $2 billion bond that matures in June, Kenya’s shilling currency has recovered from record lows.
Anger and sporadic protests have been stoked by the currency’s problems, excessive inflation, and new levies imposed to close budget shortfalls. These factors have increased the cost of living.
Robust lending to Kenya from the IMF and World Bank has helped the government to navigate a liquidity crisis. The East African nation received a $941 million lending boost from the IMF in January, which brought the size of its programme with the fund to $4.43 billion, with around $2.5 billion outstanding.
Ruto told Reuters that IMF officials would arrive on May 9 for a review meant to unlock a $1 billion tranche.
“That process is going on very well,” he said in the interview on Monday, adding that talks between the Kenyan minister of finance and the IMF in Washington during the World Bank/IMF spring meeting earlier this month were “extensive, very successful”. The IMF has not commented on the ongoing review.
In recent weeks, devastating floods have left at least 169 people dead and piled spending requirements on the government.
Even so, Ruto reiterated an earlier vow to cut spending in the upcoming fiscal year by 12%, from 4.2 trillion shillings to 3.7 trillion shillings.
The fiscal deficit is projected to narrow to 3.9% of gross domestic product (GDP) in 2024/25 financial year (July-June) from 4.9% in this financial year.
Earlier on Monday, Ruto and other African heads of state called for rich countries to commit record amounts to a low-interest World Bank facility for developing nations, saying they were facing deepening debt and climate crises.
“We want a fair international financial architecture,” Ruto said.
