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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

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

Published

10 hours 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

10 hours 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.