By George Obulutsa and Duncan Miriri
NAIROBI (Reuters) -Kenya and the International Monetary Fund will discuss a new lending programme for the East African nation, as both sides agreed to abandon a ninth review of the current $3.6 billion loan.
Kenya needs continued support to keep its economy on track after its debt-servicing costs surged due to a borrowing spree over the past decade.
“The Kenyan authorities and IMF staff have reached an understanding that the ninth review under the current Extended Fund Facility and Extended Credit Facility programs will not proceed,” Haimanot Teferra, the IMF’s mission chief, said in a statement issued at the end of a visit to Nairobi.
The IMF has received a formal request for a new programme from the Kenyan government, she added.
The current programme began in April 2021 and is due to expire next month. Its implementation, however, has been hampered by deadly anti-tax hike protests last year and a row over new borrowing from the United Arab Emirates.
Finance Minister John Mbadi told Reuters last month that the government would be seeking a financing programme.
Under the current lending programme, a total of $3.12 billion had been approved for disbursement by the end of last October, according to the IMF.
Kenya’s government has been scrambling to secure new sources of financing, including boosting revenue collection, to keep up with growing expenditure needs and its astronomical debt servicing costs.
Kenya’s total debt-to-GDP stood at 65.7% as of June last year, finance ministry data showed, well above the 55% level considered a sustainable threshold.
(Reporting by George Obulutsa and Duncan Miriri; Editing by Jamie Freed and Edwina Gibbs)
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