Kenya Edges Closer to Another Ksh 130 Billion IMF Loan to Aid Eurobond Repayment

Kenya is currently on the verge of securing Ksh130 billion from the International Monetary Fund (IMF) following the completion of the review of its programme with the financial agency.

The Ministry of Treasury led by Cabinet Secretary Njuguna Ndung’u on Tuesday, April, 2, held a meeting with the IMF officials to assess the progress of the Kenya-IMF Program under the Extended Credit Facility and the Resilient Sustainability Facility.

The discussions were majorly centred around Kenya’s performance after the acquisition of the Ksh233 billion ($1.5 billion) Eruobond which was used to buy back the maturing Eurobond issued in 2014.

Kenya has reached an agreement with IMF will now access a Ksh122 billion ($937 million) loan under the Extended Fund Facility and the Extended Credit Facility.

Ministry of Treasury in a meeting with the IMF mission led by Haimanot Teferra, to assess the progress of the Kenya-IMF Program under the Extended Credit Facility/Extended Fund Facility and the Resilient Sustainability Facility on April 2, 2024


National Treasury and Economic Planning

In addition, the IMF will also disburse Ksh7.7 billion ($59 million) from the Resilience and Sustainability Trust to help Kenya tame the effects of climate change.

The funds are set to bolster Kenya’s coffers as it prepares to complete the repayment of the Ksh310 billion Eurobond maturing in June.

Kenya had already made a buyback of Ksh233 billion ($1.5 billion) of the maturing bond using a new Eurobond, thus, leaving it with a debt of $500 million.

By using the IMF funds to repay the debt, it means Kenya won’t be going back to the market to purchase dollars to repay the debt thus posing a huge risk for those hoarding dollars.

The situation could boost the local currency against the greenback even as those hoarding dollars in expectation of govt acquisition will be forced to sell them.

Kenya’s shilling is currently at its highest gain and is expected to even strengthen further. As of April 2, commercial banks quoted the shilling at 131.00/132.00 against the dollar.

The shilling has also been boosted as a result of dollar inflows from the agriculture sector and similarly the oversubscription of the infrastructure bonds.

Besides helping in the repayment of the Eurobond, the amount will be used to clear arrears to contractors and suppliers, amid missing revenue targets.

President William Ruto (left) during a round-table with President of France Emmanuel Macron, International Monetary Fund Managing Director Kristalina Georgieva and the President of the World Bank Group Ajay Banga in Paris on June 22, 2023.


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