The International Monetary Fund (IMF) has announced a breakthrough agreement on a 142.8 billion ($938 million) loan for Kenya, addressing the nation's pressing liquidity concerns and economic hardships.

Kenya, often considered the economic powerhouse of East Africa, has faced a series of setbacks, including the destabilizing impacts of Covid-19, the reverberations of the conflict in Ukraine, and a historic drought in the Horn of Africa.

With a population of over 53 million, Kenya grapples with a substantial public debt exceeding 10,100 billion shillings (€64.4 billion), representing about two-thirds of its gross domestic product, according to Treasury figures as of June.

The IMF highlighted the nation's vulnerability to liquidity pressures, particularly due to a substantial Eurobond maturing in June 2024, amounting to $2 billion.

William Ruto, the country's leader, has assured that Kenya will make its first repayment of $300 million in December.

This accord, subject to validation by the IMF's Executive Board in their January meeting, would grant Kenya immediate access to $682 million, according to the financial institution.

"The economy has shown resilience, with real GDP growth of 5.4 per cent in the first half of 2023, primarily attributed to a robust recovery in the agricultural sector following the return of the rains," stated the IMF in a released statement.

Despite signs of economic recovery, challenges persist, including elevated prices for petrol, basic foodstuffs, and energy, and the burden of servicing public debt, particularly to China, has intensified with the currency's decline.

In an attempt to alleviate the debt burden, Ruto's government has proposed a budget, met with public dissent and occasional violence, incorporating numerous new taxes aimed at generating Sh289 billion (€2 billion) to supplement the planned Sh3,600 billion (€24 billion) budget for 2023-24.

Haimanot Teferra, head of the IMF mission, emphasized the compounding challenges arising from global financing conditions for frontier economies and geopolitical tensions.

Subject to executive board approval, the total funding for Kenya under the existing Extended Fund Facility and Extended Credit Facility arrangements would reach $4.43 billion, including the latest injection of $938 million.

This financial lifeline arrives at a critical juncture for Kenya, providing a much-needed boost to its economic recovery efforts and offering a buffer against ongoing global uncertainties.