IMF Approves Sh28 Billion Loan for Kenya

The International Monetary Fund (IMF) has approved the release of a $235.6 million (Sh28 billion) loan to Kenya for budgetary support.

The disbursement is the third tranche of a 38-month budget support program inked in April 2021 and which seeks to address Kenya’s debt vulnerabilities, the response to the Covid-19 pandemic, global shocks resulting from the Russia-Ukraine conflict, and improve governance and support broader economic reforms.

IMF deputy managing director Antoinette Sayeh said Kenya’s economic program supported by the lender’s Extended Fund Facility (EFF) and Extended Credit Facility (ECF) will provide an essential policy anchor for debt sustainability and boost public confidence.

“Despite the resilient economic recovery, the programme remains subject to downside risks, including from deeper disruptions from the war in Ukraine, unsettled global market conditions, and an increase of food insecurity,” Sayeh said.

IMF pointed out Kenya was keeping up with the program’s structural reform requirements despite notable delays in execution.

“Kenya’s structural reform agenda, focused on improving governance, has advanced despite some delays. Oversight of State-owned enterprises (SOEs) is being reinforced. New tender documents will allow achieving the long-standing goal of publishing beneficial ownership information of successful bidders for public procurements,” the lender said in a statement on Monday.

“An ongoing audit of COVID-19 vaccine spending and the recently completed comprehensive audit of the fiscal year 2020-2021 spending with a focus on COVID-19 spending will improve transparency and enable follow-up by enforcement agencies and other stakeholders.”

To cushion Kenyans from higher fuel prices, IMF urged the government to implement targeted programs to support vulnerable households.

“Although the authorities are adjusting domestic fuel prices to international levels more gradually, more targeted programs to support vulnerable households should accompany the ongoing review of the fuel pricing mechanism and plans for reforms to ensure that pricing actions are always aligned to the approved budget,” the lender pointed

The IMF has retained Kenya’s GDP growth projection at 5.7 percent for 2022 and 5.3 percent in 2023.