Kenya seeks IMF support amid economic adjustments

Kenya is in discussions with the International Monetary Fund (IMF) to secure additional funding by year-end and to potentially merge the seventh and eighth reviews of its $3.6 billion support programme.

Central Bank of Kenya (CBK) Governor Kamau Thugge announced that a staff-level agreement for the seventh review was reached in June, but it awaits approval following the government’s decision to abandon proposed tax hikes in response to violent protests.

Thugge confirmed that a fiscal framework agreement is nearly complete and emphasised the importance of an official IMF assessment of corruption and governance, aimed at fostering goodwill as the government seeks to stabilise its finances.

Additionally, the central bank is actively purchasing dollars to strengthen reserves against short-term economic shocks, although it maintains no preferred exchange rate for the Kenyan shilling.

Thugge noted that the currency is buoyed by agricultural export inflows, remittances, and foreign investment in local securities, despite lowering the 2024 economic growth forecast from 5.4 to 5.1 per cent. He also suggested that interest rates may decrease further if the shilling remains stable.

Attribution: Reuters

Subediting: Y.Yasser