IMF to help Kenya deal with debt
International Monetary Fund (IMF) has reaffirmed its dedication to assist Kenya manage its debt service challenges, particularly the impending $2 billion maturity due in June 2024.
This commitment was underscored as the multilateral lender initiated a mission to Kenya, signaling a renewed focus on aiding Kenya’s fiscal and financial stability.
Abebe Sellassie, the Director of the African Development Department at the IMF, expressed confidence in Kenya’s fiscal policies, stating that they are moving in the right direction.
He pointed out that countries that implement policies in line with the IMF’s recommendations are more likely to receive the necessary financial support from the institution.
“We have shown in the past that countries that implement policy as envisaged have IMF do what it can to provide them with the financing they need,” said Sellassie during a press briefing held in Marrakech, Morocco.
The lender said Kenya has shown a positive trajectory in aligning its fiscal policies with its recommendations. This has strengthened their resolve to provide the support required to address the imminent debt maturity.
One of the key factors contributing to the IMF’s optimism is Kenya’s proactive approach to addressing its maturing liabilities. The Kenyan government has been actively exploring options and strategies to manage the upcoming $2 billion debt maturity, which has alleviated concerns about the country’s ability to meet its financial obligations.
Sellassie further emphasized the IMF’s commitment to Kenya’s financial stability, asserting that the institution would do everything within its power to assist Kenya in light of the impending maturity in June 2024.
“Kenya’s readiness to work on options for addressing its maturing liabilities is a positive sign. The IMF will do whatever it can to support Kenya in view of the $2.0 bill=ion maturity due in June 2024,” he stated, highlighting the significance of this commitment to Kenya’s financial well-being.
The government has been implementing a series of fiscal and economic reforms, including measures aimed at improving revenue collection, controlling public expenditure, and enhancing transparency in public financial management.
These actions have garnered the IMF’s approval and have contributed to the fund’s willingness to extend its support.
Kenya is planning to buy back up to a quarter of its $2 billion 2024 international bond before year-end after it secures new loans, central bank governor Kamau Thugge told Reuters, a move aimed at alleviating concerns it can repay the looming debt.
The country is in talks to raise between $500 million and $1 billion in commercial loans from two regional policy banks, Trade & Development Bank and the African Export-Import Bank, Thugge said in an interview on the sidelines of the World Bank and IMF meetings in Marrakech.
“We would use part of that for the buyback, for the liability management, and the rest would be for the budget support,” said Thugge, who earlier this month said Kenya was expecting to “progressively reduce the liability of the Eurobond”.
“We would like to start as quickly as possible,” he said of the buyback..
