Kenya’s talks with the International Monetary Fund (IMF) for the renewal of a $1.5 billion standby credit facility have collapsed.
This follows the exit of the country’s treasury’s two most senior officials in an anti-corruption purge, leaving the country exposed to economic shocks.
An IMF delegation expected in Nairobi in July, cancelled the visit after Treasury Secretary, Henry Rotich and his Principal Secretary, Kamau Thugge were charged with corruption offences.
Collapse of the talks left in abeyance, the renewal of the standby credit facility intended to cushion the Kenyan shilling, which last week, depreciated to a four-month low against the US dollar.
The two-year standby loan facility, which expired in September last year, is intended to cushion the shilling against external shocks and raise the country’s credibility in the eyes of foreign lenders.
Rotich had in May this year, said that he expected to conclude talks with the IMF over renewal of the loan in two months.
“They did not come,” says Geoffrey Mwau, the Treasury’s director-general in-charge of budget, fiscal and economic affairs, while declining to disclose reasons for cancellation of the visit.
Being in good books with the IMF is considered a plus as it gives comfort to foreign lenders, who are currently holding in excess of $26 billion Kenyan debt.
The new Treasury Principal Secretary, Julius Muia in an interview says plans are underway to re-engage the IMF, with the possibility of resuming talks next month.
The new Treasury officials will be laying the groundwork for fresh discussions with the IMF during the Fund’s annual meetings in Washington starting October 14-20.
“We’re arranging for a detailed engagement with the IMF during its annual meetings in Washington starting from October 14, from there they will be coming in November, which is when we will kick off discussions in a structured manner,” Muia adds.
Kenya initially secured the two-year IMF precautionary facility in March 2016. It expired in March last year, but was extended up to September.