Kenya and the IMF have agreed to begin discussions for a new lending programme, abandoning the ninth review of the current $3.6 billion loan. This decision comes as Kenya faces rising debt-servicing costs and economic challenges. The current loan programme, which began in April 2021, is set to expire soon, prompting the Kenyan government to seek additional financing solutions to support its economy.
Kenya has commenced formal discussions with the International Monetary Fund (IMF) regarding a new lending programme. Both parties decided to forgo the ninth review of the existing $3.6 billion loan due to various internal pressures affecting the country’s economy. As stated by Haimanot Teferra, the IMF mission chief, this shift follows the Kenyan government’s formal request for a new programme.
The current lending arrangement initiated in April 2021 is set to expire next month. Implementation of this programme has faced significant challenges, including violent protests against taxation and disputes over new loan acquisitions from the UAE. Treasury Cabinet Secretary John Mbadi confirmed the Kenyan government’s intent to pursue a financing programme to address these pressing economic pressures.
As of late October, a total of $3.12 billion had been approved for distribution under the current programme. Given the escalating costs associated with debt servicing and rising expenditure needs, the Kenyan government is actively exploring new financing opportunities to sustain its economy. Recent data indicates that Kenya’s debt-to-GDP ratio reached 65.7% as of June last year, significantly surpassing the sustainable limit of 55%.
The recent agreement between Kenya and the IMF marks a pivotal moment in addressing the country’s economic challenges. With the abandonment of the ninth review of the current loan and the exploration of a new lending programme, Kenya aims to navigate its financial burdens effectively. Continued engagement with the IMF will be crucial for managing debt servicing costs and ensuring economic stability moving forward.
Original Source: ntvkenya.co.ke
