NAIROBI, Kenya – Kenya has reached a staff-level agreement with the International Monetary Fund (IMF), setting the stage for a substantial $976 million disbursement.
The IMF announced that if its Executive Board approves the second review of Kenya’s Resilience and Sustainability Facility, the country will gain immediate access to $120 million.
The IMF has called on Kenya to adjust its 2024/25 budget to incorporate more revenue-raising measures.
This recommendation comes in response to a deteriorating primary fiscal balance and a shortfall in tax collections, which are anticipated to keep domestic borrowing requirements high.
Despite facing liquidity challenges since 2022, Kenya successfully sold a new $1.5 billion Eurobond in February.
This strategic move, albeit costly, allowed the country to buy back another Eurobond maturing in June, easing investor concerns about a potential default and strengthening the shilling against the dollar.
The IMF noted that fiscal adjustments for 2024/25 could significantly improve Kenya’s economic outlook.
In response, Kenyan authorities have proposed several measures in the draft 2024/25 Budget and the 2024 Finance Bill aimed at fiscal consolidation.
The finance minister is scheduled to present the 2024/25 (July-June) budget to parliament on Thursday.
The overall spending is set at 4 trillion shillings ($31 billion), an increase from the initially presented 3.75 trillion shillings for the 2023/24 year, which was later revised to 3.85 trillion shillings.
