Kenya expects a green light for a $1 billion disbursement from the International Monetary Fund (IMF) next month, President William Ruto said, which would boost an economy showing improvement after averting a debt crisis earlier this year.
Kenya’s shilling currency has bounced back from record lows since the government issued a $1.5 billion Eurobond in February that calmed market jitters over a potential default on a $2 billion bond that matures in June.
The currency’s woes combined with high inflation and new taxes intended to plug budget deficits have driven up the cost of living, fuelling anger and occasional protests.
Robust lending to Kenya from the IMF and World Bank has helped the government to navigate a liquidity crisis. The East African nation received a $941 million lending boost from the IMF in January, which brought the size of its programme with the fund to $4.43 billion, with around $2.5 billion outstanding.
Ruto told Reuters that IMF officials would arrive on May 9 for a review meant to unlock a $1 billion tranche.
“That process is going on very well,” he said in the interview on Monday, adding that talks between the Kenyan minister of finance and the IMF in Washington during the World Bank/IMF spring meeting earlier this month were “extensive, very successful”. The IMF has not commented on the ongoing review.
In recent weeks, devastating floods have left at least 169 people dead and piled spending requirements on the government.
Even so, Ruto reiterated an earlier vow to cut spending in the upcoming fiscal year by 12%, from 4.2 trillion shillings to 3.7 trillion shillings.
The fiscal deficit is projected to narrow to 3.9% of gross domestic product (GDP) in 2024/25 financial year (July-June) from 4.9% in this financial year.
Earlier on Monday, Ruto and other African heads of state called for rich countries to commit record amounts to a low-interest World Bank facility for developing nations, saying they were facing deepening debt and climate crises.
“We want a fair international financial architecture,” Ruto said.
