Kenya confident of new IMF funding deal amid improved economic outlook

The government has affirmed its optimism that a new funding program from the International Monetary Fund (IMF) will be established following the conclusion of the previous one in April this year.

Treasury Cabinet Secretary John Mbadi stated that discussions between the government and IMF officials, which started on September 25 and will conclude tomorrow, October 9, are showing positive progress.

Speaking at a media briefing on Tuesday, the CS highlighted that his technical team has reported encouraging progress in the negotiations.

“The discussions are very good. We are progressing well, so we hope to have a funded program,” Mbadi said.

Mbadi further underscored that the engagement with the IMF remains critical not just for financing, but also for institutional oversight.

“Engaging with the IMF has other benefits, because at times you also need someone to continuously engage with you, to look at you and tell you that we think you are losing track,” he explained. “If you are just self-assessing, you may not know how well or how poorly you are performing.”

While pushing for the new credit arrangement, he assured that any conditions tied to the funding will be carefully negotiated to protect ordinary Kenyans.

“I guarantee that I’ll work with my team and the entire government to make sure that conditions that we agree with the IMF are conditions that are not putting pressure on ordinary Kenyans, but instead helping the ordinary Kenyans get better services and going forward stabilising the economy.”

The CS emphasised Kenya’s eligibility for concessional loans from multilateral lenders like the IMF and World Bank.

“These are our institutions, by the way. We are paying money every year as a subscription to the IMF to the World Bank. Why should we pay and not benefit?” he asked.

Mbadi also highlighted that with Kenya targeting an investment-grade rating, ongoing engagement with the IMF is viewed as a key strategy for maintaining fiscal discipline and securing more affordable external financing.

The final details of the new IMF-funded program are expected to be announced following the conclusion of the talks on Thursday. The recently concluded programme began in April 2021.

Under the agreement, which had undergone eight reviews by October of last year, the total IMF financial commitment to the country amounted to approximately $3.61 billion (Sh466.6 billion), with around $3.12 billion (Sh403.2 billion) approved for disbursement.

Ideally, funds from the global lender seek to support the country's economic stability and growth by providing financial assistance during periods of fiscal and balance of payments challenges.

These loans help the country address challenges such as budget deficits, maintaining public debt sustainability and alleviating foreign exchange shortages.

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