NAIROBI, Kenya – Kenya has successfully met all targets set by the International Monetary Fund (IMF) under its current loan program, according to Central Bank Governor Kamau Thugge.
In a statement given to Reuters on Wednesday, Thugge confirmed that the East African nation is on track and anticipates maintaining its partnership with the IMF beyond April 2024.
“We’ve achieved all that was needed for the reviews to be completed,” Thugge said on the sidelines of the IMF and World Bank annual meetings in Washington.
He noted that although the country has met its existing targets, there are further goals to achieve before December.
Kenya’s loan arrangement with the IMF, initiated in 2021, spans four years and includes additional climate change funding.
The total loan package currently amounts to $3.6 billion. However, political unrest over tax hikes derailed the government’s Finance Bill in June, exacerbating the country’s fiscal challenges.
The delay in passing the bill contributed to a growing budget deficit, unpaid bills, and a holdup in IMF disbursements.
A crucial review of Kenya’s performance under the IMF program, covering both the 7th and 8th evaluations, is scheduled for approval by the IMF’s executive board on October 30. If the review passes, it will unlock a $611 million payout.
Looking ahead, Thugge hinted that Kenya may seek a new financing arrangement with the IMF after the current program expires.
However, the scope of the next phase of cooperation is still under discussion.
“It will depend on the balance of payments and needs, it will depend on the ambitiousness of the reforms that we agree on. But definitely, we will have our relationship going forward with the IMF,” he said.
On the economic front, Thugge painted a promising picture, stating that inflation is steadily declining and Kenya’s foreign exchange reserves have grown.
Inflation, which stood at 3.6% in September, is expected to fall even further. Kenya’s forex reserves have increased to $8.6 billion, equivalent to 4.3 months of import cover, up from $8.25 billion earlier this month.
Thugge also pointed to potential for more interest rate cuts in the near future.
The Central Bank of Kenya recently slashed the benchmark lending rate by 75 basis points in October, following a 25-basis-point reduction in August—the first rate cuts in nearly four years.
“It’s the desire of everybody for interest rates to come down,” he added.
In a statement given to Reuters on Wednesday, Thugge confirmed that the East African nation is on track and anticipates maintaining its partnership with the IMF beyond April 2024.
“We’ve achieved all that was needed for the reviews to be completed,” Thugge said on the sidelines of the IMF and World Bank annual meetings in Washington.
He noted that although the country has met its existing targets, there are further goals to achieve before December.
Kenya’s loan arrangement with the IMF, initiated in 2021, spans four years and includes additional climate change funding.
The total loan package currently amounts to $3.6 billion. However, political unrest over tax hikes derailed the government’s Finance Bill in June, exacerbating the country’s fiscal challenges.
The delay in passing the bill contributed to a growing budget deficit, unpaid bills, and a holdup in IMF disbursements.
A crucial review of Kenya’s performance under the IMF program, covering both the 7th and 8th evaluations, is scheduled for approval by the IMF’s executive board on October 30. If the review passes, it will unlock a $611 million payout.
Looking ahead, Thugge hinted that Kenya may seek a new financing arrangement with the IMF after the current program expires.
However, the scope of the next phase of cooperation is still under discussion.
“It will depend on the balance of payments and needs, it will depend on the ambitiousness of the reforms that we agree on. But definitely, we will have our relationship going forward with the IMF,” he said.
On the economic front, Thugge painted a promising picture, stating that inflation is steadily declining and Kenya’s foreign exchange reserves have grown.
Inflation, which stood at 3.6% in September, is expected to fall even further. Kenya’s forex reserves have increased to $8.6 billion, equivalent to 4.3 months of import cover, up from $8.25 billion earlier this month.
Thugge also pointed to potential for more interest rate cuts in the near future.
The Central Bank of Kenya recently slashed the benchmark lending rate by 75 basis points in October, following a 25-basis-point reduction in August—the first rate cuts in nearly four years.
“It’s the desire of everybody for interest rates to come down,” he added.
