The International Monetary Fund (IMF) is set to review Kenya’s ongoing debt reduction program next month, as the country seeks to secure funds for a $2 billion eurobond repayment due in June 2024. The review will examine how Kenyan authorities plan to address fiscal challenges through policy adjustments and sourcing funds from diverse entities such as multilateral, bilateral lenders, and international financial institutions.
This initiative follows Kenya’s 38-month IMF program, launched in February 2021 to mitigate its vulnerability to debt crises. The program received a financing package increase by 45% to $3.5 billion in May and was extended to April 2025. Cumulative disbursements under this IMF initiative totaled $2.04 billion by July. According to Bloomberg Economics, Kenya’s debt crisis ranking places it as the ninth most vulnerable among 60 developing economies.
In related news, Ethiopia’s reform program, initiated two years ago under the G-20 Common Framework for debt restructuring and relief, is still underway. The country has yet to sign a Staff Level Agreement with the IMF, a critical step towards advancing the Common Framework process.
Annalisa Fedelino, Deputy Director of IMF Africa Department, confirmed that policy discussions are ongoing and another IMF mission may be imminent. She noted that an official creditors’ committee is already in place and preparatory work has started. China’s provision of debt relief to Ethiopia was acknowledged with hopes for similar actions from other creditors.
Ethiopia is currently grappling with economic challenges including high inflation and rising cost of living due to multiple shocks like the pandemic, Ukraine war, domestic conflict, and several years of drought. To tackle these issues, Ethiopia has responded by tightening monetary and fiscal policies and implementing a homegrown reform agenda.