© Reuters. FILE PHOTO: The Worldwide Financial Fund (IMF) emblem is seen exterior the headquarters constructing in Washington, U.S., September 4, 2018. REUTERS/Yuri Gripas/File Picture
By Duncan Miriri and George Obulutsa
NAIROBI (Reuters) -The Worldwide Financial Fund has agreed to extend Kenya’s lending programme by $650 million, the Kenyan president’s chief financial adviser mentioned on Tuesday.
Sovereign debt buyers are paying shut consideration to the East African nation as a consequence of a $2 billion Eurobond that’s maturing subsequent June, amid persistent weak spot in its overseas trade price that’s weighing on Kenya’s arduous forex reserves.
“As of now the 2024 Eurobond is totally funded. The refinancing is totally funded,” David Ndii, the adviser, informed an financial discussion board hosted by an area business financial institution.
“It (IMF) can increase our programme as of now as much as $650 million, that they’ve agreed to do,” Ndii mentioned.
The federal government plans to purchase again as much as 1 / 4 of the bond this 12 months, the governor of the central financial institution Kamau Thugge informed Reuters final month, to be financed by new borrowing.
An IMF crew arrived in Nairobi final week to conduct the sixth evaluation of a lending programme accepted in 2021. The fund has not but commented on the result of the mission, which is but to be accomplished.
Nevertheless, the weakening of the shilling is more likely to preserve strain on authorities funds, mentioned rankings company Fitch in an announcement issued on Tuesday.
“There stays a big threat of additional fiscal slippage, notably if the trade price weakens additional,” Fitch mentioned.
The Washington-based Fund has been criticised by some Kenyans on social media for supporting authorities insurance policies they blame for a worsening value of residing disaster.
Such insurance policies embrace a rise in direct and oblique particular person taxes from July.
Ndii defended the position of the IMF within the administration of the financial system.
“With out the IMF programme we might in all probability default,” he mentioned, including that in addition they have the choice of accessing the IMF’s distinctive entry window, which is utilized by nations in acute want of stability of funds assist.
Kenya’s worldwide bonds traded flat to a contact decrease, as markets awaited affirmation of Ndii’s remarks in regards to the improve in IMF funding.
“It’s positively a constructive signal. Whether it is adopted shortly by an IMF assertion, it will likely be extra reassuring,” mentioned a senior dealer at a Nairobi business financial institution.