The IMF has stepped in as a timely lifeline for the Kenya Kwanza Government, greenlighting a 78.3 billion shillings loan to steady Kenya’s economic ship amidst turbulent waters.
This cash infusion is coming into the country after the Finance Bill 2024 faced a resounding rejection, leaving a sizeable hole in the budget and adding strain to an economy already under immense pressure.
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This decision comes as part of the seventh and eighth reviews under the Extended Fund Facility (EFF) and the Extended Credit Facility (ECF) arrangements, alongside a review under the recently established Resilience and Sustainability Facility (RSF).
The Government of Kenya had expected more loans from the IMF especially after the global lender dispatched a team to audit Kenya’s ability to pay back loans after the rejection of the Finance Bill 2024.
IMF asserted that despite recent improvements, including shilling stabilization and reserve accumulation, the Kenyan government faces significant fiscal challenges mooted by tax revenue shortfall in the fiscal year 2023/24 and the withdrawal of the 2024 Finance Bill after public protests.
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As of June 2024, Kenya’s national debt is estimated to be:
- Debt to GDP ratio: 70.0%, which is 20% higher than the IMF’s recommended threshold of 50% for developing countries
- Debt service to revenue ratio: 69.6%, which is high and indicates a high risk of debt distress
- Public debt: Kshs 10.6 tn, with a 5-year CAGR of 10.1%
Kenya’s debt is made up of domestic debt, which includes Treasury bonds and bills, and external debt, which includes multilateral, bilateral, and commercial creditors.