Kenya denies disagreements with IMF

Nairobi — Kenya has applied for a new lending programme from the IMF that will factor in unused money from the current programme, which both sides walked away from last week, finance minister John Mbadi said on Monday.

The East African nation and the IMF agreed last week to ditch the ninth and final review of the current programme, which was set to expire next month, sending Kenya’s dollar bonds lower.

Mbadi said the decision to stop the review was down to time limitations and denied reports that Kenya had fallen out with the IMF over the government’s failure to meet some of the targets set in the current programme. The IMF has not commented on why the ninth review did not go ahead.

“Because there is a carry-over, there is some money that we have not used in the ninth review, then we agreed that there’s a possibility of a funded programme,” Mbadi told Reuters.

There was roughly $800m left on the table from the programme that had started in April 2021, he said.

The whole programme comprises $3.6bn in an extended credit facility and extended fund facility, and $541.3m in a resilience & sustainability facility, out of which $3.12bn and $180.4m, respectively, had been approved for disbursement last October.

Bloomberg reported last week that Kenya abandoned the ninth review after failing to meet the required targets, citing unnamed sources. Mbadi denied the reports.

“It is not correct that there is any problem with the IMF. That narrative people are driving is not accurate,” he said. “If anything, the IMF found our fundamentals better,” the minister said, citing debt sustainability metrics, which the IMF staff said were better than they had expected.

Kenya has struggled to rein in its fiscal deficit and boost revenue collection, two of the main requirements of the IMF.

The IMF declined to give further information on the new programme request by Kenya, saying only that talks between both sides will be held and an announcement made in due course.

Kenya had failed to meet some targets during the combined seventh and eighth reviews of the programme. However, both were approved by the IMF board last October, which triggered payout of the funding tranches linked to those reviews.

Mbadi said he expected another programme to be put in place in the next fiscal year starting in July.

President William Ruto’s government has struggled to get its finances back on track over the past two years after a borrowing spree led to a surge in debt-servicing costs.

Kenya’s international bonds traded around 0.2c-0.4c  higher on Monday, in line with broader markets, Tradeweb data showed.

Reuters