The International Monetary Fund (IMF) said on Tuesday it has agreed to a $1 billion (927 billion euro) loan for Kenya, an East African country facing liquidity and economic difficulties.

Kenya’s economy is marred with $70 billion in debt (about €65 billion) and a significant depreciation of its currency, the shilling, versus the dollar.

President William Ruto’s government has proposed a budget that includes various new levies that are projected to collect 289 billion shillings (€2 billion) to augment the 3.6 trillion shillings (€24 billion) budget planned for 2023-24.

The accord must still be approved by the IMF’s executive board, which meets in July. According to the IMF, if authorized, Kenya will have immediate access to $410 million.

The financial organisation said on Tuesday that its commitment to Kenya will be enhanced to $3.52 billion (€3.2 billion)

Kenya, the East African economic superpower with a population of roughly 53 million people, is dealing with high inflation (+7.9% year on year in April) and catastrophic drought. Growth has stalled at 4.8% in 2022, down from 7.6% in 2021.

“The government budget has been under pressure due to revenue collection shortfalls and difficult financing conditions,” the IMF stated.

The financial institution also encouraged Kenyan authorities to overhaul state firms, specifically the national energy provider Kenya Power and the airline Kenya Airways, both of which reported record losses in 2022.

President William Ruto’s government, which was elected in August 2022, plans to cut the deficit by instituting additional taxes, most notably on cosmetics, petrol, and gaming.

While the IMF feels Kenya’s medium-term prognosis is favourable, it emphasizes that “significant challenges remain in the context of slower global economic growth and difficult financial conditions.”