IMF approves $606m lending to Kenya

NAIROBI: The IMF said it has cleared $606 million in lending to Kenya as it struggles to pay off debts and boost taxes after mass protests led to financial reforms being scrapped.

Kenya is considered an economic bright spot in the troubled East African region.

But it is grappling with around $80 billion in external and domestic debt, and interest payments are eating up two-thirds of its annual revenue, more than its bills for health or education.

An International Monetary Fund review was delayed by protests that broke out in June over a finance bill that aimed to raise some $2 billion through taxes across many areas.

Coming on the back of years of high inflation and corruption scandals, the bill sparked unrest that saw more than 60 people killed — and it was eventually scrapped by President William Ruto.

“Kenya’s economy remains resilient, with growth above the regional average, inflation decelerating, and external inflows supporting the shilling and a buildup of external buffers, despite a difficult socio-economic environment,” said Gita Gopinath, IMF first deputy managing director, in a statement late Wednesday.

But she said revenue and exports had underperformed, especially after the finance bill was cancelled.

“A difficult adjustment path lies ahead,” said Gopinath. “Clearly communicating the necessity and benefits of the reforms is paramount.”

She said more support was needed for Kenyan banks and to tackle governance and corruption issues.

Earlier this month, Kenya requested an IMF governance audit to examine how corruption and other issues were impacting its finances — an idea pushed by Western creditors as a way to improve the country’s image after the reputational damage caused by scandals and the brutal crackdown on protesters.