NAIROBI (Multibagger) - The International Monetary Fund (IMF) has dispatched a team to Kenya on a fact-finding mission following deadly protests that derailed the government's planned tax increases. President William Ruto's decision to abandon this year's finance bill in June has left the heavily indebted government facing a larger budget deficit, mounting unpaid bills, and a delay in the disbursement of IMF funding.
"This is a fact-finding mission and is part of our ongoing and constructive dialogue with the Kenyan authorities to find a balanced path forward," said Julie Kozack, head of communications for the IMF.
Kenya had agreed to a four-year loan with the IMF in 2021 and had recently signed up for additional lending to support climate change measures, bringing its total IMF loan access to $3.6 billion. However, the IMF requires regular reviews of reforms, with Kenya's case requiring reviews every six months before receiving funding tranches.
Although Kenya had reached a staff level agreement with the IMF in June on the seventh review of its programme, the protests led to the withdrawal of the finance bill, putting the sign-off by the fund's executive board and subsequent payout on hold.
Kenyan government officials are hopeful that the IMF board will approve the disbursement of a $600 million tranche later this month, but no meeting date has been set for further discussions.
Analysis: The visit by the IMF team to Kenya is crucial in determining the future economic path for the country. The delayed disbursement of IMF funding could further strain Kenya's financial situation, leading to potential austerity measures or increased borrowing costs. Investors and citizens alike should monitor the outcome of the IMF visit closely, as it could impact the country's economy and financial stability.