The International Monetary Fund (IMF) plans to give KES28.3B to Kenya to help in financing its strained budget. The IMF staff expressed their satisfaction with Nairobi’s economic reforms in the face of Covid-19, and the funds will be dispersed in the coming weeks.
The progress that the Kenyan government is making in its economic reform programmes satisfied the bank’s assessors. The deal now awaits endorsement by the Fund’s management and board which will be through soon.
Between March 31 and April 22 the IMF staff engaged Kenya to discuss progress on reforms and authorities’ policy priorities in the third review of Kenya’s economic programme supported by the Extended Fund Facility (EFF) and Extended Credit Facility (ECF).
In a statement on April 25, Ms Goodman said the Kenyan economy has seen a robust recovery as the effects of the pandemic wane.
“Spillover from the war in Ukraine are expected to have a modest impact on growth in the near term, as Kenya’s direct exposure to Russia and Ukraine is relatively limited,” said Mary Goodman, the IMF mission leader.
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After the deal, the total IMF support in a 38-month financing facility to the Kenyan government will rise to $1.17 billion.
The facility lies under the EFF and ECF.
Special Drawing Rights(SDR)
Kenya will be financed from Special Drawing Rights(SDR), an international reserve asset created by the IMF to supplement its member countries’ official reserves.
“The IMF staff team and the Kenyan authorities have reached a staff-level agreement on the third review of Kenya’s economic programme under the EFF and ECF arrangements. The agreement is subject to approval of IMF management and the Executive Board in the coming weeks. Upon completion of the Executive Board review, Kenya would have access to SDR 179.13 million (equivalent to about $244 million), bringing the total IMF financial support under these arrangements to SDR 865.77 million (equivalent to about $ 1,178 million),” she said.
Kenya was hit hard by the Covid-19 pandemic, with the economy contracting to 0.1% in 2020, from 5.4 % in 2019.
In May 2020, the Fund approved the disbursement of $739 million to be drawn under the Rapid Credit Facility (RCF) to support the government’s response to the Covid-19 pandemic.
In April 2021, the IMF Board approved a $2.34 billion three-year financing product for Kenya.
The funds were meant to support the government’s response to the Covid-19 pandemic, and enhance governance.
Also, they were used to reduce debt vulnerabilities while safeguarding resources to protect vulnerable groups.
Nevertheless, the IMF praised the state for its robust programme performance, delivering resilience that is helping the country navigate these global shocks.
This has helped the country to remain within the authorities’ targets and continuing to make progress in addressing debt vulnerabilities.
