The International Monetary Fund (IMF) logo in Washington, United States, September 4, 2018. — REUTERS/YURI GRIPAS//FILE PHOTO

 – Kenya has reached a staff level agreement with the International Monetary Fund on Tuesday, the organization said, paving the way for the disbursement of about $976 million.

The deal has to be approved by the fund’s executive board in Washington before disbursement of the money.

The fund said in a statement that if its Executive Board approves a second review of Kenya’s Resilience and Sustainability Facility, it would have immediate access to $120 million.

Although the East African nation has been facing liquidity challenges since 2022, it managed to sell a new $1.5 billion Eurobond from international markets in February, albeit at a steep price, to partly buy back another Eurobond that is maturing in June.

The issuance assuaged investor concerns about a potential default, restored foreign investors confidence in the East African economy and caused the shilling currency to strengthen against the dollar.

The fund said despite this, a worsening in the primary fiscal balance in 2023/24 and tax collection shortfalls was expected to keep domestic borrowing needs high.

“As a result, interest payments have increased, putting pressure on public debt even after the latter benefited from a strengthened shilling,” IMF said.

Kenya’s current IMF lending deal, which is for a total of $3.6 billion, was first agreed in April 2021. It has since been extended and expanded.

The current review is the seventh under the program.

Last week, the central bank governor said Kenya will use part of a part of a $1.2 billion World Bank budget support loan to make a payment of roughly $500 million on a Eurobond maturing this month. – Reuters