IN a significant development, the IMF staff and Kenya have successfully reached an agreement that could provide Kenya with more than $1bn of new financing. This agreement comes as a potential relief for the government finances of East Africa’s largest economy.
Kenya has been facing financial strain due to mounting debt repayments and the adverse impacts of a severe drought, described as the worst in four decades. However, earlier this month, the managing director of the IMF expressed confidence that Kenya would not default on its obligations.
On Tuesday, the IMF released a statement outlining the details of the agreements. These include the latest review of the Extended Fund Facility and Extended Credit Facility arrangements, which were approved in April 2021, as well as a new arrangement under the Resilience and Sustainability Facility.
As part of the agreement, the IMF staff and Kenyan officials have agreed to extend the Extended Fund Facility and Extended Credit Facility arrangements by an additional 10 months, pushing the deadline to April 2025. This extension allows more time for Kenya to fulfil all the requirements. Additionally, the funding available to Kenya under these facilities will be increased by about $544 million.
Under the Resilience and Sustainability Facility, Kenya will also gain access to around $544 million. This facility is specifically designed to enhance climate change resilience and adaptation efforts.
The IMF stated that the cumulative funding committed to Kenya through these three facilities totals nearly $3.5bn. The staff-level agreement is expected to be reviewed by the IMF’s executive board in July, marking another crucial step in finalising the financial support for Kenya.