Kenya Receives Ksh78B Loan From IMF Following Economic Review
The International Monetary Fund (IMF) Board, which was sent to Kenya to conduct an economic review and assess the country’s ability to repay debt, has completed its seventh and eighth reviews.
As a result, they approved the disbursement of $606 million (Ksh78 billion) in two consignments.
In a report issued on October 30, the global financier announced that the two reviews, the extended arrangement under the Extended Fund Facility (EFF) and the arrangement under the Extended Credit Facility (ECF), approved in April 2021, and the review under the Resilience and Sustainability Facility (RSF) arrangement with Kenya, approved in July 2023, had been completed.
This significant decision allows for the immediate disbursement of approximately US$485.8 million (Ksh62.5 billion) under the EFF/ECF arrangements and approximately US$120.3 million (Ksh15.4 billion) under the RSF arrangement, totaling $606 million (Ksh78 billion).
The IMF has approved a loan of Sh78 billion to Kenya through the extended fund facility and extended credit facility to help restore fiscal and external buffers. #K24Updates pic.twitter.com/IxyYv9KKcn
— K24 TV (@K24Tv) October 31, 2024
Gita Gopinath, First Deputy Managing Director of the IMF and Acting Chair, stated that the Kenyan economy has remained resilient, with growth exceeding the regional average.
“Kenya’s economy remains resilient with growth above the regional average, inflation decelerating, and external inflows supporting the Shilling and a buildup of external buffers, despite a difficult socio-economic environment,” she stated.
She also stated that the EFF/ECF and the RSF would continue to support the authority’s efforts to strengthen macroeconomic stability, reduce debt vulnerabilities, promote reforms, and mitigate climate-related risks.
However, when compared to previous reviews, she stated that the arrangements had weakened.
“While the accumulation of foreign exchange reserves and inflation was better than expected, the fiscal performance fell significantly short of the targets,” she noted.
“The revenue and export underperformances increased debt vulnerabilities. Implementation of several reforms was also delayed.”
She emphasized the importance of policymakers remaining agile in order to avoid the increased risks associated with the fiscal strategy.
“Contingency planning remains critical with policies adapting to evolving outcomes to safeguard stability and ensure that program objectives continue to be met.”
“The Central Bank of Kenya’s decisive actions have supported price stability and external sustainability, including through institutional changes to improve the functioning of the monetary policy operational framework and the money and foreign exchange markets.”
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“Exchange rate flexibility is vital to improve resilience to external shocks and competitiveness. Addressing banks’ deteriorating asset quality and emerging risks requires close monitoring and strengthened oversight,” she added.
On October 25, a high-level delegation from the National Treasury and the Central Bank of Kenya (CBK) traveled to Washington, D.C. to attend the 2024 International Monetary Fund (IMF)/World Bank Annual Meetings, prior to the IMF’s decision to release the funds.
“These meetings present an opportunity to forge strategic partnerships and access financial resources that are critical for continuing Kenya’s economic recovery and sustained growth,” stated CS Mbadi.
“We expect to share with our development partners Kenya’s recent successes in maintaining low inflation and supporting growth.”
Kenya Receives Ksh78B Loan From IMF Following Economic Review
