Kenya pushes for additional IMF loan support

Kenya is pushing to access additional resources in the form of loans from the International Monetary Fund (IMF) as external commercial financing remains out of reach.

According to Central Bank of Kenya (CBK) Governor Patrick Njoroge, the multi-lateral lender should double down its support for economies in emerging and frontier markets to help offset funding deficits created by present global shocks.

“We didn’t get all of this external resources that we were to get from the markets. We would require additional inflows which would help us right away. A doubling or tripling of access is something that should be put on the table,” he told a session at the IMF Annual Meetings in Washington DC on Thursday last week.

Dr. Njoroge says Kenya has presented the proposal to the IMF but expressed frustration in the speed on consideration.

Kenya has been unable to access external financing from commercial sources including issuing sovereign bonds (Eurobonds) and syndicated loans on higher interest rates including wide swings in yields on issued Kenyan sovereign bonds.

“Financial markets have become dysfunctional. We have been shut from the capital markets as we are unable to borrow at appropriate rates,” he added.

In the financial year ended on June 2022, Kenya missed out on issuing both a Eurobond and syndicated loan on prohibitive interest rates to leave behind a hole in its 2021/2022 budget financing.

Presently, Kenya is part of a 38-month IMF program that will see it receive a total of Ksh.283.5 billion ($2.34 billion) by mid-2024.

The arrangement under the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF) was reached in February last year and was set to address the next phase of Kenya’s COVID-19 response and reduce debt vulnerabilities.

In mid-July, the IMF completed the third review of the program whose total disbursements for the budget support presently stands at Ksh.146.4 billion ($1.208 billion).

The CBK Governor is nevertheless asking for additional and timelier disbursements from the IMF terming the current approach as ‘drip feeding’.

Kenya has backed international financial institutions (IFIs) to provide the much needed external financing as global shocks persist.

Apart from the IMF, Kenya has previously tapped support from the World Bank Group by taking loans off its development policy operations (DPO) program.