(Bloomberg) -- The International Monetary Fund has reduced the size of its program with Kenya thanks to easier funding conditions in the East African nation, while taking a step toward unlocking the remaining money.

The IMF reached a staff-level agreement which cut Kenya’s access under two credit facilities to 2.71 billion special drawing rights ($3.6 billion) from 2.93 billion SDRs agreed in November, the Washington-based lender said in a statement on Tuesday.

The fund and authorities agreed on “recalibrating access to IMF resources to align more closely with Kenya’s current needs following its access to the international bond markets earlier this year,” it said. Kenya issued a Eurobond in February. The reduction in program size corresponds to about $290 million, the IMF said.

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Yields on the 2028 eurobonds remained little changed at 9.27% as at 1.39pm Tuesday London time.

The agreement, which must be approved by the IMF board, will give the East African nation access to about $976 million which remains under the two facilities, the IMF said. It didn’t detail how much money would be disbursed. 

In addition, completing the second review of a separate resilience and sustainability facility will release an additional $120 million. The board is expected to discuss Kenya in July.

Reducing debt vulnerabilities is a central objective of the program initially agreed in 2021 with the IMF, which says Kenya is at high risk of debt distress. Public debt jumped by a fifth in 2023 from the prior year and so-called pending bills ballooned to about $5.4 billion.

A shortfall in tax revenue collection and a deterioration in Kenya’s primary fiscal balance for the financial year ending June is expected to keep domestic borrowing needs elevated, the IMF said. 

“As a result, interest payments have increased, putting pressure on public debt even after the latter benefited from a strengthened shilling,” it said.

On Monday, President William Ruto assented to the East African nation’s second supplementary budget in the current fiscal year, which seeks to reduce the overall budget by 3.3% to 3.85 trillion shillings ($29.7 billion) after nine-month revenue including appropriations in aid fell short of target by 13%.

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