Kenya’s International Monetary Fund (IMF) program has on Tuesday been reduced in size after the partial refinancing of a $2.0 billion (Ksh.258.7 billion) Eurobond earlier this year to support debt sustainability and policy reforms.
The remaining access is now set at $976 million (Ksh.126.2 billion), down from the initial $1.27 billion (Ksh.164.2 billion), representing 135.55% of quota compared to the previous 175.85%.
The total size of Kenya’s IMF program, initiated in 2021, now stands at $3.6 billion (Ksh.465.7), down from the initial $3.88 billion (Ksh.501.6), excluding the Resilience and Sustainability Facility (RSF).
$90 Million Special Drawing Rights
The RSF, initially expected to unlock Special Drawing Rights (SDR) of 135.68 million, is now set at SDR 90.46 million.
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“An IMF team, in collaboration with Kenyan authorities, reached a staff-level agreement on a comprehensive policy package required to complete the seventh reviews of Kenya’s economic program under the Extended Fund Facility (EFF) and Extended Credit Facility (ECF) arrangements, as well as the second review of the RSF arrangement,” IMF Representative to Kenya, Haimanot Teferra said.
This package aims to preserve debt sustainability, maintain price stability, manage fiscal risks, address financial sector vulnerabilities, and continue advancing structural reforms for inclusive and resilient growth.
The IMF’s exceptional access window for Kenya has been removed following the Eurobond refinancing.
What The Reduced Funding Means
What this means is that Kenya has exhibited improved debt management and reduced refinancing risks associated with the June 2024 Eurobond.
The partial buyback of the Eurobond was facilitated by the proceeds from a new issuance in February.
IMF said that because of Kenya’s buyback of a significant share of the 2024 Eurobond using proceeds from a new issuance, which alleviated near-term exceptional balance of payment needs, it agreed, together with Treasury to bring cumulative access under the EFF/ECF arrangements within the normal limits and a recalibration of access towards the more concessional financing under the ECF, consistent with the Fund’s policy on blended access.
The agreement is subject to approval by the IMF’s Executive Board.
