Kenya’s economy is on the mend and the country is unlikely to need further assistance from the International Monetary Fund, according to the head of President William Ruto’s economic council, Bloomberg News reported. Kenya signed a four-year, $3.6 billion financing deal with the IMF amid the Covid-19 pandemic in 2021. That program expires in April and both Kenya’s Treasury and an IMF head of mission in the country have confirmed that talks about a new one have begun.
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Kenya
Kenya’s local borrowing costs are stuck near the highest in almost a decade as uncertainty over funding options mounts, Bloomberg News reported. Protests over tax hikes sought by the International Monetary Fund turned deadly in June and ultimately forced the government to backtrack. With the latest IMF aid tranche on hold for now, officials are opting instead to boost sales of shilling-denominated bonds, keeping yields on the local debt elevated. While a surprise interest-rate cut last month has lowered yields across the curve, borrowing costs remain close to the highest since December 2015.
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Kenya’s central bank surprised financial markets by cutting its benchmark interest rate for the first time since early 2020, providing some respite to consumers who have become increasingly frustrated by the high cost of living, Bloomberg News reported. The monetary policy committee lowered the key rate to 12.75% from 13%, Governor Kamau Thugge said in an emailed statement Tuesday. Only one of nine economists in a Bloomberg survey predicted the move. Yields on government bonds due 2031 eased 4 basis points to 11.55% by 6:51 pm in Nairobi, the first drop after three consecutive days of gains.
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The World Bank is poised to approve $1.2 billion of budget financing to Kenya before the end of April, unlocking key financing for the East African nation that wants to cut its reliance on commercial debt, Bloomberg News reported. The amount is slightly less than the $1.5 billion that Kenyan authorities had anticipated receiving from the Washington-based lender and follows other disbursements by the International Monetary Fund as well as Trade and Development Bank, a pan-African lender. Kenya had earmarked the World Bank funds to finance its budget in the fiscal year that ends June 30.
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The Standard Group on Wednesday refuted claims that the organization was facing bankruptcy and would be shutting down, Kenyans.co.ke reported. In a statement issued by the Group’s Acting Chief Executive Officer, Joe Munene, the media house stated that the information circulating online was purporting a false narrative. “The Standard Group PLC wishes to inform its audiences, customers, suppliers, staff, shareholders and all other stakeholders that information circulating on social media touching on the integrity of the Company, its Management and Staff is fake”, read the statement.
A proposal by France, Denmark and Sweden to restrict used-clothing exports from the European Union could hurt the clothing resale industry in Kenya, which employs 2 million Kenyans, a representative of second-hand clothes sellers said, Reuters reported. The EU exported 1.4 million tonnes of used textiles in 2022, more than twice as much as in 2000 according to U.N. trade data. Exports to developing countries can lead to pollution when clothes that can not be resold end up in dumps, the EU has said.
KCB Group Plc.’s efforts to clean up its loan book of legacy bad debt is being frustrated by government delays in paying suppliers and court injunctions slowing down the sale of collateral to recoup losses, Bloomberg News reported. The Nairobi-based bank with operations across seven African nations posted a 29% jump in gross non-performing loans to 208.3 billion shillings ($1.57 billion) in its full-year earnings.
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Kenyan lawmakers approved the Treasury’s plans to offer debt-for-nature and food-security swaps to bolster the nation’s finances for its next fiscal year starting July 1, Bloomberg News reported. The East African nation is in talks with the United Nations and development partners to structure the debt swaps, according to a Treasury report that was published last month. The report didn’t provide details on how much Kenya plans to raise via these instruments and how they would work.
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