IMF expands Kenya’s financing package to $938 million

The additional funding will strengthen the country’s reserves before its $2 billion Eurobond payment in June.

IMF expands Kenya’s financing package to $938 million
Image assets:freepik | Design by Samuel Ojo for Mariblock.
ℹ️
Editor’s note: This story is part of Mariblock’s “State of Fiat” coverage. Digital assets such as bitcoin are seen as competitors to central bank money. Therefore, we consider informing our audience of the state of their local currencies worthwhile.

The International Monetary Fund recently approved a $938 million expansion of its financing package to Kenya. The agreement grants the East African country immediate access to around $682 million, the fund said in a statement Thursday. 

Dive in  

  • The country intends to use the funding to strengthen its reserves before its $2 billion Eurobond payment in June.  
  • The proposed agreement between Kenya and the IMF is awaiting final approval from the Fund’s executive board in Washington, D.C.  
  • The board is expected to consider the agreement for approval in January 2024. 
  • If approved, Kenya will have access to a total of $3 billion, bringing its existing Extended Credit Facility (ECF) and Extended Fund Facility (EFF) arrangements to $4.43 billion.  

Why this matters  

  • Kenya is currently navigating a liquidity crunch and investor uncertainty as it grapples with its ability to secure funding from financial markets before the bond’s maturity in June.  
  • The IMF noted that the lingering effects of the Covid-19 pandemic and climate change-induced droughts further obstruct Kenya’s economic path. 

Key quote  

Haimanot Teferra, the head of the mission, said: 

“The authorities’ strong reform program aims to enhance the policy framework substantially and restore confidence to ensure access to the global bond market. Steadfast implementation of a package of mutually reinforcing policies remains the key to sustain macroeconomic stability.” 

Zoom out 

  • The program was approved in April 2021; Kenya received an extra $1 billion in May 2023.  
  • The IMF also agreed with Kenyan officials in May to extend the EFF and ECF arrangements.  
  • The extension will give Kenya an additional ten months, until April 2025, to meet all the requirements set by the IMF.  
  • Kenya will also access about $544 million under the Resilience and Sustainability Facility (RSF) to address climate change challenges. The total funding to Kenya under these three facilities amounts to around $3.5 billion.