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Kenya seeks $1.9 billion bailout as financial woes continue

Published

2 years ago

April 16, 2023

As part of moves to strengthen its weakened financial position, Kenya’s National Treasury is requesting $1.9 billion in emergency finance from the Bretton Woods institutions and a group of foreign commercial banks.

The East African country hopes that the fund will also help to support its currency— the shilling— at the exchange market, which has fallen to a record low— above Ksh130 against the US dollar.

The fund will help to stabilize foreign exchange reserves, which have already fallen below the legal requirement of four months’ worth of import coverage, and ease a bitter dollar shortage that has put enterprises that rely on the greenback in an operational crisis.

According to Haron Sirma, director in charge of debt management at the National Treasury, the new loans include $1 billion from the World Bank, which is anticipated in May; $300 million from the International Monetary Fund (IMF), which is anticipated in June, and $600 million from a syndicate of foreign commercial banks, which is anticipated in June.

“All is well… no cause to panic,” said Sirma. “The current challenges in the global financial markets have exacerbated the liquidity challenges in the global financial markets on revenues and borrowing. We consider this temporary, with pressure easing in the coming weeks.”

She added that “debt maturities will decline significantly over the next eight weeks; the month of April will be a revenue boom as corporates declare dividends and taxes, and large external inflows from Bretton Woods.”

Last week, the head of the International Monetary Fund’s Africa Department, Abebe Aemro Selassie revealed that Kenya was not expected to seek a restructuring of its debt despite current strains and a looming bond payment.

The country maintianed that it would not default on its debt repayment obligations despite delayed payment of civil service salaries.

Kenya’s state debt is anticipated to be over Ksh9 trillion ($67.66 billion), compared to a Ksh10 trillion ($75.18 billion) debt ceiling. At the moment, Kenya has a $2 billion Eurobond maturing in June 2024.

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IMF, Egypt reach agreement for fourth review of Egypt’s $1.2 billion loan request

Published

2 days ago

December 26, 2024

Ifeoluwa Dada

Egypt and the International Monetary Fund (IMF) have reached a staff-level agreement over the fourth review of the Extended Fund Facility arrangement, which might lead to a $1.2 billion payout under the program.

In March, Egypt, struggling with rising inflation and cash shortages, consented to the $8 billion, 46-month facility. Its economic problems were made worse by a precipitous drop in Suez Canal revenue over the last year due to regional tensions.

Over the next two years, Egypt’s government has committed to raising its tax-to-revenue ratio by 2% of GDP, according to the IMF, emphasising removing exemptions rather than raising taxes.

According to a statement from the IMF, this would allow it to expand social expenditure to support vulnerable populations.

“While the authorities’ plans to streamline and simplify the tax system are commendable, further reforms will be needed to enhance domestic revenue mobilization efforts,” the statement said.

According to the IMF statement, Egypt had also committed to maintaining its commitment to a flexible currency rate and to taking more urgent action to guarantee that the private sector became the primary driver of development.

The IMF’s executive board still has to accept the fourth review’s staff-level agreement.

VenturesNow

Libya’s eastern govt accepts petrol subsidy elimination

Published

2 days ago

December 26, 2024

Ifeoluwa Dada

In a recent statement, the eastern government of Libya claimed it had reached a consensus on a plan to eliminate gasoline subsidies and would draft a mechanism to carry out the accord.

Additional information on the idea was not released by the administration led by Osama Hamad, a challenger to the internationally acknowledged Tripoli-based government.

However, it is uncertain if Hamad’s government would be able to carry out the plan in the divided nation.

According to the Global Petrol Prices online tracker, a litre of gasoline costs just 0.150 Libyan dinars ($0.03) in OPEC member Libya, making it the second-cheapest in the world.

Following an uprising against former ruler Muammar Gaddafi in 2011, smuggling networks have thrived in the ensuing political unrest and armed fighting. In 2014, conflicting eastern and western governments separated the nation.

A World Bank analysis estimates that the annual value of fuel smuggling from Libya is at least $5 billion.

In a meeting with Mari Barrasi, the deputy governor of the Central Bank of Libya (CBL), located in Tripoli, and four members of the bank’s board of directors, Hamad in Benghazi supported the idea of removing subsidies.

The CBL’s Benghazi branch offices served as the venue for the conference.

The eastern parliament appointed Hamad in 2023 to succeed Abdulhamid Dbeibah, who had been put in position in 2021 under a U.N.-backed procedure that the parliament said had lost its legitimacy.

Dbeibah, who is located in Tripoli, stated in January that he will conduct a public poll on the topic of eliminating gasoline subsidies, but he hasn’t done anything about it since.

According to CBL figures, gasoline subsidies cost 12.8 billion Libyan dinars between January and November of this year. 4.8 Libyan dinars to $1 is the official exchange rate.