Kenya Expects Conclusion of IMF Loan Talks in a Few Months

(Bloomberg) -- Kenya’s central bank governor said he expects negotiations with the International Monetary Fund for a new standby-loan facility to conclude in months.

“We discussed the general direction” of the facility in Washington last week, Patrick Njoroge said Tuesday in an interview with Bloomberg Television. “We expect it to be concluded in the next few months.”

Njoroge said the government is seeking a facility aligned to what it had before to be drawn upon in the event of shocks that can’t be dealt with using normal measures. Kenya’s previous facility of $1.5 billion expired in September.

There is no rush in terms of balance-of-payments needs, Njoroge said. Kenya wants to have ownership of the program and policies that support it. “That’s what we are discussing,” he said.

The East African nation is the world’s largest exporter of black tea, one of its main sources of foreign currency, and is facing a prolonged dry spell that’s left more than one million people in need of food aid. The government forecasts economic expansion of 6.3 percent this year, but if delayed rainfall ends up being a “severe drought,” it could take about 1 percentage point off that growth rate, according to Njoroge.

Eurobond Refinancing

Negotiations for the IMF facility are happening as the government plans to sell $2 billion of Eurobonds this year. Njoroge said the proceeds will be used to refinance debt due in June.

“The Eurobond that we are thinking of has been already anticipated in the budget,” Njoroge said. “It will not lead to new additional net financing, but rather lengthening the maturity or refinancing the Eurobond that are maturing.”

©2019 Bloomberg L.P.