Kenya - IMF agree to start talks on fresh funding
Under the arrangements, total IMF financial commitment stands at about $3.61 billion (Sh467.3 billion), of which about $3.12 billion (Sh403.8 billion) has been approved for disbursement as of the eighth review in October last year.
The International Monetary Fund (IMF) has confirmed the receipt of Kenya’s request for a new funding programme, as the current one expires in April this year.
This after concluding its country visit from March 6-14, purposefully for the ninth and last review of the current programme, which would have unlocked disbursements of up to $680 million (Sh88 billion).
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However, the lender, through a statement dated March 17, noted that the two parties instead agreed not to proceed with the last funding review.
“Kenyan authorities and IMF staff have reached an understanding that the ninth review under the current Extended Fund Facility (EFF) and Extended Credit Facility (ECF) programs will not proceed,” the lender said.
Instead, it stated that a formal request for a new program has been received and that it will engage with Kenyan authorities moving forward.
Notably, the IMF team met with President William Ruto, Treasury Cabinet Secretary John Mbadi Ng’ongo, Central Bank of Kenya Governor Kamau Thugge, and their teams, as well as representatives from various government agencies.
The current programme which is due in April, began in April 2021.
Under the arrangements, total IMF financial commitment stands at about $3.61 billion (Sh467.3 billion), of which about $3.12 billion (Sh403.8 billion) has been approved for disbursement as of the eighth review in October last year.
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, arguably, help the country address challenges such as budget deficits, maintaining public debt sustainability and alleviating foreign exchange shortages.
Consequently, to unlock the funding, Kenya is required to adhere to certain conditions, with the implementation of economic reforms and fiscal consolidation being the most common.
Fiscal consolidation includes measures such as cutting down on public spending and increasing revenue, certainly through more taxation.
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