Kenya has applied for a new lending programme from the International Monetary Fund (IMF) that will factor in unused money from the programme which both sides walked away from last week, finance minister John Mbadi said on Monday.
The East African nation and the IMF agreed last week to ditch the ninth and final review of the programme set to expire next month, sending Kenya's dollar bonds lower.
Mbadi said the decision to stop the review was down to time limitations, and denied reports that Kenya had fallen out with the IMF over the government's failure to meet some targets set in the programme. The IMF has not commented on why the ninth review did not go ahead.
"Because there is a carry-over, there is some money we have not used in the ninth review. Then we agreed there's a possibility of a funded programme," Mbadi told Reuters.
There was roughly $800m (R14.5bn) left on the table from the programme started in April 2021, he said.
The programme comprises $3.6bn (R65.6bn) in an extended credit facility and extended fund facility and $541.3m (R9.8bn) in a resilience and sustainability facility, out of which $3.12bn (R56.8bn) and $180.4m (R3.29bn), respectively, had been approved for disbursement in October.
Bloomberg reported last week that Kenya abandoned the ninth review after failing to meet the required targets, citing unnamed sources. Mbadi denied that.
"It is not correct there is any problem with the IMF. The narrative people are driving is not accurate. If anything, the IMF found our fundamentals better," the minister said, citing debt sustainability metrics which IMF staff said were better than they had expected.
Kenya has struggled to rein in its fiscal deficit and boost revenue collection, two of the main requirements of the IMF.
The IMF declined to give further information on the new programme request by Kenya, only saying talks between the two sides will be held and an announcement made in due course.
Kenya had failed to meet some targets during the combined seventh and eighth reviews of the programme. However, they were approved by the IMF board in October, which triggered payout of the funding tranches linked to the reviews.
S&P Global Ratings said on Monday any missed disbursements from the IMF could complicate the government's strategy of lowering its debt-servicing costs and delay other funding.
"Since IMF funding often serves as a catalyst for other official and private flows, we expect there might be delays to World Bank (about $800m) and United Arab Emirates ($1.5bn) funding in first-half 2025," S&P said.
Mbadi said the World Bank loan was not related to the IMF money, and he expected another programme to be put in place in the next fiscal year starting in July.
President William Ruto's government has struggled to get its finances back on track over the past two years after a borrowing spree led to a surge in debt-servicing costs.
Kenya's international bonds traded around 0.2c 0.4c higher on Monday, in line with broader markets, Tradeweb data showed.
Reuters
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