IMF approves $606m loan for Kenya
The International Monetary Fund announced that it has approved $606 million in loans to Kenya, which is facing challenges in settling its debts and increasing tax revenue following the cancellation of financial reforms prompted by widespread protests.
Kenya is viewed as an economic beacon in the troubled East African area.
However, it is dealing with approximately $80 billion in both external and domestic debt, with interest payments consuming two-thirds of its annual income, surpassing expenditures for health or education.
Demonstrations in June against a financial bill intended to raise approximately $2 billion through various taxes caused a delay in an IMF assessment.
Following years marked by high inflation and corruption scandals, the bill incited unrest that resulted in over 60 deaths before being withdrawn by President William Ruto.
“Kenya’s economy continues to show resilience, with growth exceeding the regional average, inflation slowing down, and external funding supporting the shilling along with a buildup of external reserves, despite challenging socio-economic conditions,” stated Gita Gopinath, the IMF’s first deputy managing director, in a statement issued late Wednesday.
However, she noted that revenue and exports have lagged, particularly after the cancellation of the finance bill.
“A challenging adjustment process lies ahead,” Gopinath stated. “Effectively communicating the need for and advantages of the reforms is crucial.”
She emphasized that Kenyan banks require additional support to address governance and corruption challenges.
Earlier this month, Kenya sought an IMF governance audit to investigate the impact of corruption and other issues on its finances—an initiative advocated by Western creditors to enhance the country's reputation following the damage caused by scandals and the severe response to demonstrators.
Leave A Comment