The International Monetary Fund (IMF) has granted Kenya a $684.7 million lending boost, providing immediate relief to the East African country amid its financial challenges.
The funds include $624.5 million from an expanded program agreed with the Washington-based lender last year and $60.2 million from its Resilience and Sustainability Facility, the IMF said in a statement following an executive board meeting on Wednesday.
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The decision confirms a staff-level recommendation made in November to further enhance the program.
The IMF initially agreed to increase its financing package to Kenya by 45% to $3.5 billion in July, extending the duration of the 38-month program by an additional 10 months until April 2025.
On the hand, Kenya is also exploring a potential debt swap strategy to strengthen its financial position ahead of the critical repayment deadline.
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“Kenya’s growth remained resilient in the face of increasing external and domestic challenges. The EFF/ECF and RSF arrangements continue to support the authorities’ efforts to sustain macroeconomic stability,” the IMF said.
According to the government, together with expected funds from the World Bank and regional banks like the African Export-Import Bank and Trade & Development Bank, the IMF funds will assist Kenya in meeting imminent foreign debt maturity without depleting its foreign exchange reserves.
Kenya’s balance of payments and financial positions have been strained by the lingering effects of the COVID-19 pandemic and recurrent climate change-induced droughts, as noted by the IMF, leading to a depreciation of its shilling currency.
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According to Bloomberg, the country had $6.8 billion of foreign exchange reserves as of Jan. 11.
The money will help the government shore up its foreign-exchange reserves ahead of the $2 billion Eurobond repayment in June while supporting the shilling Africa’s second worst-performing currency this year.
Kenya is also exploring a potential debt swap strategy to strengthen its financial position ahead of the critical repayment deadline.
