IMF Approves A 3-Year Ksh 263 Billion Loan To Kenya

The International Monetary Fund (IMF) Executives have approved a $2.4 billion 263 billion shillings loan to Kenya. It seems the roaring appetite for borrowing for Jubilee Government is not going away any time soon. The loan is under the Extended Fund Facility and Extended Credit Facility.

The new program will last for three years to support the government’s COVID-19 response. Kenyans are however skeptical as to whether the loan will be directed to the intended purpose given the corruption history of the current regime.

“The program will support the next phase of the country’s COVID-19 response and the authorities’ plans for a strong multi-year effort to stabilize and begin reducing debt levels relative to GDP,” Mary Goodman who was representing the IMF said.

The Eurobond

At the same time, according to Reuters, Kenya plans to raise $1 billion by the end of June and an additional 1 billion euros in the fiscal year starting July through Eurobond sales, according to Haron Sirima, director-general of the nation’s Public Debt Management Office.

The planned issuances are consistent with the budget policy, Sirima said by phone, declining to give further details on the time-line of the sales.

Read More:

• Kenya Used Ksh 250 Billion To Fight Covid-19 By December 2020
• Kenya Acquires Ksh 262 Billion From IMF For Covid-19 Recovery

The East African nation is increasing foreign commercial loans as investors seek high-yielding debt from emerging and frontier markets amid record liquidity in developed countries.

The new loans will add on to public debt that stood at 7.28 trillion shillings ($66.3 billion) by the end of December, equivalent to 65.6 percent of the gross domestic product in nominal terms, according to government data.

The coronavirus pandemic has slashed government revenue and increased spending pressures, pushing the economy’s budget deficit in the year through June to an estimated 8.7 percent of gross domestic product, compared with an earlier projection of 7.5 percent.