KEY POINTS
- Zimbabwe and the EU sign $81.4 million in agreements focused on agriculture, biodiversity, governance, and gender equality, marking strengthened ties.
- The EU aims to mobilize European businesses to invest in Zimbabwe as part of a renewed cooperation push.
- Zimbabwe–EU trade, totaling $700 million, is poised to grow with increased agricultural sector support and the Vision 2030 partnership.
Kenya has successfully obtained a substantial financial boost of approximately $606 million from the International Monetary Fund (IMF).
The infusion follows the IMF Executive Board’s approval of the seventh and eighth reviews under the Extended Fund Facility (EFF) and the Extended Credit Facility (ECF), as well as a review of the Resilience and Sustainability Facility (RSF). This financial package aims to enhance Kenya’s fiscal stability and strengthen its resilience against climate-related shocks.
IMF backs Kenya’s fiscal stability amid debt risks
According to Kenyan Wall Street, the IMF endorsement reinforces Kenya’s efforts to rebuild its fiscal buffers, even as it grapples with significant external financing pressures, which have impacted the Kenyan shilling and necessitated a strategy to rebuild reserves. Although this inflow offers temporary relief, large revenue shortfalls and resistance to new tax measures pose persistent challenges for Nairobi’s fiscal agenda.
“The EFF/ECF and RSF arrangements continue to support the authorities’ efforts to maintain macroeconomic stability, address debt vulnerabilities, and implement necessary reforms,” stated Gita Gopinath, Acting Chair of the IMF. Despite some progress, the IMF underscored the need for a robust fiscal consolidation strategy, pointing to recent fiscal performance gaps that add to Kenya’s debt risks.
Revenue concerns and urgent fiscal reforms
The IMF flagged missed revenue targets as a potential risk to debt sustainability, calling for swift reforms to enhance the tax system’s efficiency and equity. “A credible fiscal consolidation strategy remains central,” Gopinath emphasized, adding that efficient revenue collection would be crucial for long-term fiscal health.
IMF board members urged Kenya to prioritize reforms in governance, strengthen anti-corruption frameworks, and enforce Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) measures. These reforms are critical not only to reinforce public trust but also to attract climate financing and mitigate debt pressures.
The Central Bank of Kenya has received praise for decisive actions, including tightening monetary policy and promoting greater exchange rate flexibility to shield the economy from external shocks.
Economic growth set to slow
Kenya’s economic growth, as measured by Real GDP, is projected to decelerate from 5.6% in 2023 to 5.0% in 2024 and 2025, according to the IMF’s latest economic outlook. The IMF noted that emerging markets, especially in sub-Saharan Africa, face economic pressures from commodity disruptions, conflicts, and extreme weather events, all of which have led to downward revisions in growth expectations across regions.
As Kenya navigates this complex economic landscape, its partnership with the IMF will be crucial to sustaining macroeconomic stability and meeting evolving fiscal challenges.
