Kenya to receive Sh209.3 billion IMF loan in December

Kenya is set to receive a substantial loan of up to $1.61 billion (Sh209.3 billion) from the International Monetary Fund (IMF) in December, as confirmed by Central Bank of Kenya Governor Kamau Thugge.

This funding will enhance the government's reserves, which are expected to reach $1.9 billion (Sh245 billion) by the end of the year.

The loan agreement comes as the government and the IMF finalise the combined seventh and eighth reviews of Kenya's economic programme.

Discussions have shown "significant progress," particularly regarding key fiscal targets, including a fiscal deficit set at 4.3 per cent of GDP.

Upon completing the seventh review, Kenya was originally slated to receive about $607.2 million (Sh78.3 billion).

This amount includes roughly $487.2 million (Sh62.9 billion) allocated specifically for the Extended Fund Facility (EFF) and Extended Credit Facility (ECF) arrangements.

Under the eighth review, the country is anticipated to access an additional $1 billion (Sh131 billion).

Financial stability

This financial support is part of a broader initiative aimed at reinforcing Kenya's financial stability and improving public finance management.

"We are in the final stages of an agreement. Kenya expects the IMF disbursement by the end of December to help strengthen the country's reserves," Thugge noted.

Once the seventh review is completed and approved by the IMF Executive Board, Kenya's total financial support will be adjusted to 135.55 per cent of its quota, approximately $976 million (Sh125.9 billion).

This adjustment will include an additional allocation of about $156 million (Sh20.13 billion) for zero-interest loans under the Extended Credit Facility.

In total, the support for the EFF/ECF programme will reach $3.60 billion (Sh464.5 billion).

Additionally, completing the second review under the Resilience and Sustainability Facility (RSF), approved on July 17, 2023, will provide Kenya with another $120 million (Sh15.5 billion).

During a staff meeting in September 2024, the IMF reiterated its commitment to assist Kenya in identifying policies to complete the ongoing reviews as soon as possible.

Under the 38-month Extended Credit Facility and Extended Fund Facility approved by the IMF in 2021, Kenya is projected to secure $2.34 billion (Sh302.6 billion) to address challenges stemming from the COVID-19 pandemic and manage debt vulnerabilities.

Earlier this year, the country received an additional $941 million under the program, raising the total IMF commitment to $3.9 billion (Sh504.3 billion)

This confirmation of funding arrived shortly after the Kenyan government requested an official IMF assessment of corruption and governance issues.

In light of recent fluctuations, Thugge also mentioned that the Central Bank has been actively purchasing foreign exchange to stabilise the market.