Kenya expecting $1 billion IMF disbursement, boosting economic outlook

Kenya expecting $1 billion IMF disbursement, boosting economic outlook
Kenyan President William Ruto | Reuters

Kenyan President William Ruto has announced expectations for a $1 billion disbursement from the () next month, signalling a positive turn for the economy following efforts to avert a debt crisis earlier this year.

The Kenyan shilling has rebounded from historic lows since the government's issuance of a $1.5 billion Eurobond in February, which helped ease concerns over a potential default on a $2 billion bond maturing in June.

Despite economic challenges such as high inflation and new taxes aimed at addressing budget deficits, robust lending from the IMF and has assisted the government in navigating liquidity issues. received a $941 million lending boost from the IMF in January, increasing its program size with the fund to $4.43 billion, with approximately $2.5 billion still outstanding.

President Ruto confirmed that IMF officials are scheduled to conduct a review starting May 9, with talks between Kenya's finance minister and the IMF in Washington during the recent World Bank/IMF spring meeting deemed successful. However, the IMF has not commented on the ongoing review.

In the face of recent devastating floods and increased government spending requirements, President Ruto reiterated plans to reduce spending by 12% in the upcoming fiscal year, aiming to decrease the budget from 4.2 trillion shillings to 3.7 trillion shillings. The fiscal deficit is projected to narrow to 3.9% of (GDP) in the 2024/25 financial year from 4.9% in the current fiscal year.

Furthermore, President Ruto, along with other African leaders, has called on wealthy nations to contribute record amounts to a low-interest World Bank facility for developing nations, citing deepening debt and climate crises. Ruto emphasized the need for a fair international financial architecture to address these challenges.

  • Reporting by Duncan Miriri; Editing by Aaron Ross; editing by Philippa Fletcher

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