The International Monetary Fund (IMF) has approved a $606 million loan for Kenya to support the nation as it tackles mounting debt and revenue challenges following recent financial setbacks.
Kenya recognized as an economic leader in East Africa, is currently burdened with around $80 billion in both external and domestic debt, with interest payments consuming two-thirds of its annual revenue—exceeding the country’s healthcare and education expenditures.
This IMF loan approval follows delayed reviews due to widespread protests triggered by a proposed finance bill, which aimed to generate approximately $2 billion through new taxes across various sectors.
The unrest, fueled by ongoing inflation and corruption scandals, resulted in over 60 fatalities and led to President William Ruto ultimately withdrawing the bill.
Despite socio-economic pressures, “Kenya’s economy remains resilient, with growth above the regional average, decreasing inflation, and external inflows that are strengthening the shilling and external reserves,” remarked Gita Gopinath, IMF’s first deputy managing director. However, Gopinath emphasized the need for improved revenue and export performance, given the setbacks from the abandoned finance bill.
She highlighted the necessity of transparent communication regarding the benefits of future reforms and stressed the importance of bolstering Kenya’s banking sector, as well as addressing governance and corruption issues.
Earlier this month, Kenya requested an IMF-led audit on governance, aligning with recommendations from Western creditors to enhance the nation’s financial transparency and reputation after recent corruption scandals and the violent suppression of protests.
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