IMF Approves Ksh 78 Billion Loan to Kenya

The International Monetary Fund (IMF) board has sanctioned the release of $606 million (Ksh78 billion), which will be distributed in two installments.

In a report published on October 30, the global financial institution confirmed the completion of two reviews; the extended arrangement under the Extended Fund Facility (EFF) and the Extended Credit Facility (ECF), both of which were approved in April 2021, as well as a review under the Resilience and Sustainability Facility (RSF) arrangement, which received approval in July 2023 for Kenya.

This significant decision facilitates the immediate allocation of approximately $485.8 million (Ksh62.5 billion) under the EFF/ECF arrangements and around $120.3 million (Ksh15.4 billion) under the RSF arrangement, culminating in a total of $606 million (Ksh78 billion).

Gita Gopinath, the First Deputy Managing Director of the IMF and Acting Chair, remarked that the Kenyan economy has demonstrated resilience, achieving growth that surpasses 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.

Gopinath emphasized that the EFF/ECF and the RSF would persist in their support for the authority’s initiatives aimed at establishing macroeconomic stability, alleviating debt vulnerabilities, advancing reforms, and addressing climate-related challenges.

However, she noted that, in comparison to previous assessments, the arrangements had deteriorated. While the growth of foreign exchange reserves and inflation rates exceeded expectations, fiscal performance fell considerably short of the established targets.

The underperformance in revenue and exports has heightened debt vulnerabilities, and the execution of several reforms has also faced delays, she remarked.

Gopinath further highlighted the necessity for agile policymaking to mitigate the heightened 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,” she added.