NAIROBI, Kenya
The International Monetary
Fund has reached a staff-level agreement with Kenya, unlocking immediate access
to a $682.3 million tranche and boosting the current lending programme by $938
million, the fund said on Thursday. The IMF Managing Director, Kristalina Georgieva (L) with the Kenyan President, William Ruto
The East African nation is
grappling with acute liquidity challenges caused by uncertainty over its
ability to access funding from financial markets before a $2 billion Eurobond
matures next June.
Its balance of payments and
financial positions have also been strained by the legacy of the COVID-19
pandemic and frequent climate change-induced droughts, the fund said at the
conclusion of a two-and-a-half week review mission to Nairobi.
"The tightening global
financing conditions for frontier economies and global geopolitical tensions
are compounding the challenges," said Haimanot Teferra, the head of the
mission.
Subject to the approval of the
Washington-based fund's executive board, Kenya will have access to a total of
$3.88 billion, which would bring its total funding under the existing Extended
Fund Facility and Extended Credit Facility arrangements to $4.43 billion, the
IMF said.
The current programme, agreed
in April 2021, was first bumped
up in May by an extra $1 billion, including $544 million under the
IMF's Resilience and Sustainability Facility (RSF), and a new arrangement under
the same RSF.
Kenya's international bonds
rose modestly on the news, with the $2 billion note maturing in June 2024
rising the most. It was up 0.43 cents on the dollar to 95.6 cents at 0928 GMT.
Although the deal was widely
expected after it was telegraphed by
a senior adviser in Kenya's presidency, it was still being viewed positively,
said a Kenyan market participant who did not wish to be named.
The new IMF financing,
together with expected funds from the World Bank and regional banks like
Afrexim, would allow Kenya to pay maturing foreign debt without running down
its hard currency reserves, said the market participant.
The additional money was more
than international markets were expecting, said Thato Mosadi, a strategist at
Jefferies in London.
"I am very positive that
reserves could be higher than USD6.5bn following the payment of the (2024)
eurobond, and even more confident now following the IMF's augmentation,"
she said.
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