The International Monetary Fund (IMF) declared on Thursday that it had agreed to give $938 million loan to Kenya, an East African nation struggling with economic challenges and liquidity issues.
Kenya’s economy, which is the engine of East Africa, has been seriously damaged by COVID-19. The Horn of Africa is also experiencing a historic drought and the shockwaves of the war in Ukraine. According to Treasury data, as of the end of June, the nation with over 53 million people had public debt of over 10,100 billion shillings (69.88 billion US dollars), or almost two-thirds of its gross domestic product.
The IMF states that Kenya is under pressure “on its liquid assets, mainly due to the large Eurobond maturing” in June 2024 for a total of $2 billion, while it also points out that the tourist and agriculture industries are recovering.
In December, William Ruto declared that the nation will refund a $300 million first payment.
The IMF Executive Board must still approve this deal at its January meeting. The banking institution states that Kenya will have instant access to $682 million if authorised.
“The economy has shown resilience, with real GDP growth of 5.4% in the first half of 2023, mainly thanks to a solid recovery in the agricultural sector following the return of the rains,” the International Monetary Fund said in a statement.
Even though October saw a decline in inflation (+6.9% year over year), the cost of energy, basic groceries, and gas is still high. With the devaluation of the currency, the cost of servicing the nation’s public debt—which is mostly owed to China—has increased significantly.