International Monetary Fund (IMF) logo is seen outside the headquarters building in Washington, U.S., as IMF Managing Director Christine Lagarde meets with Argentine Treasury Minister Nicolas Dujovne September 4, 2018. REUTERS/Yuri Gripas

NAIROBI, June 11 (Reuters) – Kenya has reached a staff level agreement with the International Monetary Fund on Tuesday, the organisation said, paving the way for the disbursement of about $976 million.

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.

The lender also urged the East African nation to adjust its 2024/25 budget to include more revenue raising measures, as a worsening in the primary fiscal balance in the previous financial year and a tax collection shortfall was expected to keep domestic borrowing needs high.

Although Kenya 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 economy and caused the shilling currency to strengthen against the dollar.

The fund said fiscal adjustments for 2024/25 could remedy the situation.

“Authorities have taken decisive steps towards fiscal consolidation by introducing several measures in the context of the draft 2024/25 Budget and the 2024 Finance Bill,” it added.


The finance minister is due to present the 2024/25 (July-June) budget to parliament on Thursday.

Parliament approved overall spending for the year at 4 trillion shillings ($31 billion), up from the 3.75 trillion shillings the minister presented last June for the 2023/24 year. That budget was later adjusted to 3.85 trillion shillings.

The 2024/25 budget will be accompanied by the Finance Bill 2024, a separate law outlining revenue-raising proposals which some critics say some could cripple sectors including financial services, transport, manufacturing and retail.

Kenya’s current IMF deal, which is for a total of $3.6 billion, was agreed in April 2021. The current review is the seventh under the program.

Last week, the central bank governor said Kenya will use 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.

($1 = 129.0000 Kenyan shillings)


(Additional reporting by Gursimran Kaur in Bangalore; Editing by Jacqueline Wong and Miral Fahmy)