Kenya will soon make a decision on the nature of its next International Monetary Fund (IMF) program once the current arrangement ends, according to the National Treasury.
Treasury Principal Secretary Chris Kiptoo said in a phone call on Friday that no final decision has been reached yet.
According to Kiptoo a formal announcement regarding the next IMF program will be made after the current $3.6 billion arrangement expires in April 2024.
“Kenya has not reached such a decision yet” and will make a pronouncement “on the nature of the next program with IMF after the end of the current program in April,” said Kiptoo as reported by Bloomberg.
Kenya could potentially opt for a new funded program to replace the ongoing agreement, initially signed in 2021.
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In the past, Kenya had a $1.5 billion stand-by credit facility, which was accessible only in the event of economic shocks. However, the country did not utilize that precautionary arrangement, which expired in 2018.
“The IMF remains an important development partner for Kenya,” added Kiptoo. In July, the PS informed lawmakers that discussions about a new program were underway, though specific details were not disclosed.
Kenya is currently facing significant economic challenges, including a delayed $600 million disbursement from the IMF.
The country’s income targets have been affected, as the government had to forgo $2.7 billion in planned taxes following violent protests against new revenue-raising measures.
Under reforms tied to the current IMF program, President William Ruto’s administration has pushed for tax increases, spending cuts, and the sale of state-owned enterprises.
However, these measures sparked a public outcry, leading to deadly protests in June and July that claimed the lives of at least 60 people.
As a result, Kenya’s budget deficit has widened, forcing the Treasury to seek $2.8 billion in foreign loans and raise $3.2 billion locally to cover the shortfall, despite the country’s debt being rated as high-risk.
In a bid to bridge this financing gap, Nairobi is reportedly in talks for a $1.5 billion loan from Abu Dhabi, according to sources familiar with the situation.
