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Kenya, IMF reach staff-level deal for extra $938 million

Published

1 year ago

November 16, 2023

The International Monetary Fund (IMF) has confirmed that it has reached a staff-level agreement with Kenya, unlocking immediate access to a $682.3 million credit tranche.

The agreement will also boost the current lending programme by $938 million as Kenya grapples with acute liquidity challenges caused by uncertainty over its ability to access funding from financial markets before a $2 billion Eurobond matures next June.

IMF’s head of the mission, Haimanot Teferra stated that “The tightening global financing conditions for frontier economies and global geopolitical tensions are compounding the challenges.”

Kenya will have access to a total of $3.88 billion, subject to the executive board of the Washington-based fund’s approval. This would increase Kenya’s total funding under the current Extended Fund Facility and Extended Credit Facility arrangements to $4.43 billion, according to the IMF.

Kenya would be able to pay off maturing foreign debt without depleting its hard currency reserves thanks to the new IMF financing, as well as anticipated funding from the World Bank and regional banks like Afrexim, the market participant stated.

The current programme, which was agreed upon in April 2021, was initially increased by an additional $1 billion in May.This increase included a new arrangement under the same RSF and $544 million under the IMF’s Resilience and Sustainability Facility (RSF).

Among the debt the government must pay in foreign currencies is a $2 billion Eurobond that is due in June of next year. Investors are a little concerned about the bond’s maturity because the refinancing option was out of reach due to an increase in yields.

To reassure markets that it was serious about containing the skyrocketing debt, President William Ruto’s administration drastically reduced the budget deficit in June, when it was first presented to parliament.

Kenya is one of the nations in Africa struggling with debt. The nation is currently having financial difficulties as a result of having to devote almost half of its income to paying off impending debt. The situation has been made worse by the sharp devaluation of the Kenyan shilling.

VenturesNow

Food prices drive second straight monthly hike in Nigeria’s inflation

Published

2 days ago

November 17, 2024

Ifeoluwa Dada

According to official statistics released on Friday, Nigeria’s inflation rate increased for the second consecutive month in October, rising to 33.88% in annual terms from 32.70% in September, mostly as a result of increasing food costs.

In an attempt to boost economic development and strengthen public finances, President Bola Tinubu devalued the naira and reduced subsidies, which caused inflation to spike in the second half of last year.

As the effects of the naira devaluation started to lessen in July of this year, a slew of hikes in the price of petroleum and devastating floods that destroyed crops once again exacerbated pricing pressures, making the greatest cost-of-living crisis in decades worse in Africa’s most populous country.

According to the National Bureau of Statistics, price increases for basics such as rice, maize, bread, potatoes, and cooking oil prompted food inflation to surge from 37.77% in October to 39.16% year over year.

This year, more than 1.5 million hectares of agriculture have been damaged by torrential rain and floods in 29 of Nigeria’s 36 states, leaving millions hungry and displacing large numbers of people.

In an effort to curb inflation, the central bank has raised interest rates five times this year. On November 26, it is expected to make its final rate decision of the year.

VenturesNow

MTN financial report reveals drop in group service revenue

Published

2 days ago

November 17, 2024

Ifeoluwa Dada

Due to operational difficulties in Sudan and the depreciation of the Nigerian naira, MTN Group, Africa’s largest telecom provider, announced on Thursday an 18.5% decline in service revenue for the third quarter that concluded on September 30.

With 288 million users in 17 African regions, MTN said that its group service revenue dropped from 156.3 billion rand ($6.99 billion) in the same quarter of the previous year to 127.4 billion rand.

Despite stating that “the naira was less volatile on a sequential basis in Q3 than in preceding quarters,” the business reported a 48.7% decline in MTN Nigeria’s income due to the currency’s depreciation.

Due to a stronger Ugandan shilling than the previous year, Uganda’s largest contributor, MTN South Africa (MTN SA), expanded by a meagre 3.3%.

Due to “subscriber registration regulations in Nigeria and a decline in users in Sudan, where the conflict has displaced millions of people,” the business reported that its subscriber base increased by 1.6% to 288 million.

Given the higher demand in Nigeria despite the legal obstacles, MTN plans to increase its capital expenditures, which it expects would total between 28 and 33 billion rand for the entire year.