Kenya to receive Ksh.52.7 billion loan from IMF

Kenya is set to receive a further Ksh.52.7 billion ($433 million) from the International Monetary Fund’s Extended Fund and Extended Credit Facilities (EFF & ECF).

The disbursement, which still awaits approval by the IMF Executive Board, follows the conclusion of an IMF staff mission to Kenya which represented the fourth review of the country’s 38-month program with the multilateral lender.

The new disbursement is expected to take total disbursements by the IMF to Kenya under the EFF and ECF facilities to Ksh.188.3 billion ($1.548 billion).

This to include an additional Ksh.15.5 billion ($127.4 million) from the augmentation of the program to cover external financing needs resulting from drought and debt vulnerabilities tight external financing conditions.

The visiting IMF Staff team which was in the country between October 25 and November 8 says Kenya has been making fair progress in addressing debt vulnerabilities against a challenging domestic and external environment.

“There has been good progress on fiscal adjustments needed to address debt vulnerabilities though pressures remain elevated. The authorities are taking forceful measures to further reduce the fiscal deficit. Fuel subsidies were mostly eliminated in September and the variable cost adjustments in electricity prices reinstated,” the IMF said in a statement issued Tuesday night.

“In addition, the new government is in the process of formulating a supplementary budget for the 2022/23 financial year that will institute significant spending cuts with a view to modestly reducing the deficit from the previously programmed level of 5.9 per cent of GDP.”

The IMF has however called for rapid structural and governance including reforms at the troubled Kenya Airways and Kenya Power.

“This includes completing efforts underway to publish beneficial ownership information for awarded government contracts, which will be a major step towards transparency and accountability. Reform of financially troubled State-Owned Enterprises (SOEs) including Kenya Airways and Kenya Power and Lighting Company will also be key,” the IMF added.

The visiting IMF staff team met with key government officials including President William Ruto, new Treasury Cabinet Secretary Prof. Njuguna Ndung’u and CBK Governor Dr. Patrick Njoroge.

At the end of the 38-month program which expires on June 30, 2024, Kenya is expected to have received Ksh.284.6 billion ($2.34 billion) from the IMF program which was reached in February last year.

[$1=Ksh.121.61]