By George Obulutsa

NAIROBI International Monetary Fund staff and Kenya have reached an agreement that could unlock more than $1 billion of new financing, which could help relieve pressure on government finances in East Africa's largest economy.

Kenya's finances have been under strain from rising debt repayments and the effects of the worst drought in four decades, although the IMF's managing director said earlier this month she was not expecting the country to default.

The IMF said in a statement on Tuesday that the agreements included the latest review of Extended Fund Facility and Extended Credit Facility arrangements approved in April 2021 and a new arrangement under the Resilience and Sustainability Facility.

Fund staff agreed with Kenyan officials to extend the Extended Fund Facility and Extended Credit Facility arrangements by another 10 months to April 2025 to give more time to meet all the requirements, and to increase the amount of money available to Kenya under those facilities by about $544 million.

Kenya will also have access to about $544 million under the Resilience and Sustainability Facility, designed to bolster climate change resilience and adaptation.

The IMF said cumulative funding committed to Kenya under the three facilities amounted to about $3.5 billion and that the staff-level agreement was expected to be considered by its executive board in July.

(Reporting by George Obulutsa; Editing by Alexander Winning, William Maclean)