Kenya’s finance minister reports that negotiations for a new credit package have started with the IMF

Kenya’s finance minister told Reuters on Wednesday that the country has already begun negotiations with representatives of the International Monetary Fund to secure a new credit package when the current one ends in April.

The Washington, D.C.-based lender is needed to help the East African country keep its economy on track after its debt-servicing expenses skyrocketed as a result of a ten-year borrowing binge. Following fatal demonstrations last year, the administration canceled a proposal to increase taxes in order to earn money.

“Maybe before the current program comes to a close in April, there should be some indicators whether we are starting a new program and what that new program will entail,” Mbadi added.

He stated that although the government still has the option of using a $1.5 billion commercial loan from the United Arab Emirates at an interest rate of 8.25% to finance its budget this fiscal year, authorities are also looking at other options, such as issuing a Eurobond.

He mentioned a recent change by Moody’s Investor Services from “negative” to “positive” for Kenya’s outlook, saying, “We have the option of taking that… or we go to the market which is open now, and with our good and positive credit.”

Kenya may be severely impacted by the U.S. President Donald Trump administration’s decision to halt foreign aid since it does not have the financial resources to replace the funds, Mbadi said, adding that he hoped the United States will change its mind.

“That financial space is not available to us… The budget and domestic resources will need to be redirected,” he stated.

In order to stop the further decline in workers’ buying power, Mbadi, who was appointed to the position in August of last year after President William Ruto supported his administration after weeks of deadly protests, stated that the government would not increase income taxes.

According to Mbadi, the administration has succeeded in stabilizing the economy’s core, as seen by the decline in inflation and the drop in Treasury bill rates to single digits.

According to the minister, increased agricultural output is the primary reason for the economy’s predicted 5.3% growth this year compared to its 4.6% growth last year.

To encourage lending and economic activity, the government was eager to see reduced lending rates throughout the economy.

However, in order to prevent the dissatisfaction that led to protests last year, Mbadi stated that efforts are being made to ensure that the public is aware of the measures authorities are implementing to promote growth.

He spoke on the government’s economic management during a public gathering arranged by the people in an open-air park in Nairobi earlier this week, and he plans to hold more engagements of this nature around the nation in the months to come.

“We must be more transparent, communicate to Kenyans,” he stated.