President William Ruto has highlighted the crucial role of robust lending from the IMF and World Bank in assisting Kenya during a liquidity crisis.
He expressed confidence in receiving a fresh IMF disbursement during a recent statement during the Labour Day Celebration.
Ruto mentioned that Kenya anticipates approval for a $1 billion disbursement from the International Monetary Fund (IMF) in June, 2024.
This, he said, will provide a significant boost to an economy that has shown signs of improvement after successfully averting a debt crisis earlier in the year.
President Ruto noted the rebound of Kenya’s shilling from record lows since the government issued a $1.5 billion Eurobond in February.
This issuance helped allay market concerns over a potential default on a $2 billion bond maturing in June.
The president acknowledged the currency’s struggles, coupled with high inflation and the implementation of new taxes aimed at addressing budget deficits, led to a rise in the cost of living. These factors fueled public discontent and occasional protests.
Notably, the country received a $941 million lending boost from the IMF in January, which increased the size of its program with the fund to $4.43 billion, with approximately $2.5 billion still outstanding.
President Ruto informed said IMF officials conducted a review on May 9 to unlock a $1 billion tranche.
He described the process as progressing smoothly and mentioned extensive and successful talks between the Kenyan Cabinet Secretary of finance and the IMF in Washington during the World Bank/IMF spring meeting earlier that month. However, the IMF refrained from commenting on the ongoing review.
Despite facing challenges such as devastating floods in recent weeks, which resulted in the loss of at least 169 lives and increased government spending, President Ruto reiterated a previous commitment to reducing spending in the upcoming fiscal year by 12%, from 4.2 trillion shillings to 3.7 trillion shillings.
He projected a narrowing fiscal deficit to 3.9% of gross domestic product (GDP) in the 2024/25 financial year, down from 4.9% in the current financial year.
On Monday, President Ruto, along with other African heads of state, appealed to wealthy nations to allocate record amounts to a low-interest World Bank facility for developing nations.
They emphasized the urgent need for a fair international financial architecture to address deepening debt and climate crises.
