Kenya opens talks with IMF, and World Bank for a new loan to help settle the Eurobond, which will be due by June 2024.
In order to pay off the $2.0 billion (Sh297.6 billion) Eurobond that is due in June 2024, Kenya has begun discussions with the International Monetary Fund (IMF) and other development financial organizations for a new loan.
Following market volatility that made issuing new debt to refinance expiring debt an unlikely solution to satisfy the maturity, which is due in eight months, the government is turning to multilateral institutions.
During the upcoming review mission, which is anticipated to take place in December, the request for additional finance and the amount Kenya is requesting will be a significant subject matter, according to Catherine Pattillo, the IMF’s deputy director for Africa.
Kenya has so far taken out Sh312.5 billion ($2.1 billion) from the ongoing IMF program, including the second-largest withdrawal of $410.0 million ($61.0 billion), which the Fund’s executive board approved after the fifth review was completed in the middle of this year.
The program for Kenya was extended by the fund by 10 months, ending in April 2025.
“For Kenya, the authorities are steadfastly addressing this and collaborating with us in the IMF, the World Bank, and other donors to further strengthen their economic programme which they have been very much committed to and they are working to secure additional funding while implementing fiscal measures to address some of the funding requirements,” Pattillo says.
“Working with us, we will have an upcoming review mission and the team will be in dialogue with the authorities and other donors to continue to develop a programme that’s going to help implement those reforms.
Those reforms are intended both to reduce debt vulnerabilities and ultimately help Kenya in regaining access to the markets,” the IMF official says.
This revelation from the IMF comes amid the appointment of Citi and Standard Bank as the lead arrangers for Kenya’s planned return to the global markets for a new Eurobond.
The Central Bank of Kenya (CBK) has indicated that the government is leaning more towards tapping into concessional financing to settle the maturing obligation.
If Kenya succeeds in unlocking additional financing from the development finance institutions, it will be the latest in a series of augmentations to existing programmes that have seen the country tap into cheaper credit from the Bretton Woods institutions.