IMF Loans to Kenya: The International Monetary Fund’s Executive Board has approved a three-year loan package of US$2.34 billion (Sh. 257 billion) for Kenya.
The loan was approved under the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF) for Kenya in an amount equivalent to SDR 1.655 billion (305 percent of quota or about Sh. 257 billion) to support the next phase of the authorities’ COVID-19 response and address the urgent need to reduce debt vulnerabilities.
“The goals of the programs are to support pandemic response, help reduce debt vulnerabilities, address weakness in state-owned enterprises, and support anti-corruption framework,” the IMF said.
The approval now enables immediate disbursement of about Sh. 33.8 billion, usable for budget support. This follows Fund emergency support to Kenya in May 2020 (100 percent of quota, equivalent to Sh. 81.2 billion at the time of approval.
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“Kenya’s debt remains sustainable, but it is at high risk of debt distress. To address debt-related risks, the authorities have taken action to hold the fiscal deficit and debt ratios to 8.7 and 70.4 percent of GDP, respectively, this fiscal year. Fiscal and balance-of-payments financing needs remain sizable over the medium term. Support from the G-20 under the Debt Service Suspension Initiative (DSSI) and development partners will contribute to closing the financing gap in 2021 along with financing from capital markets.,” the IMF added.
The new loan will come in with conditions. ““The near-term reform agenda should also focus on urgent structural policy challenges. As financial weaknesses in some state-owned enterprises (SOEs) have emerged as a key source of fiscal risks, the ability to manage these risks should be strengthened while ensuring that any support provided to SOEs is consistent with Kenya’s limited fiscal space,” the IMF said. “Fiscal structural reforms should prioritize revenue administration, spending efficiency, and fiscal transparency. Continuing improvement in the anti-corruption framework through steps to enhance transparency and accountability and the AML/CFT agenda are also essential.” IMF Loans to Kenya.
