The Executive Board of the International Monetary Fund (IMF) agreed to offer Kenya about (US$941.2 million) which is Ksh 150 Billion under the Extended Fund Facility .
The decision allows for the immediate disbursement of SDR469.25 million (about US$624.5 million) Which translates to Ksh 99.6 Billion under the EFF/ECF arrangements.
At the conclusion of the Executive Board’s discussion, Ms. Antoinette Sayeh, Deputy Managing Direction and Acting Chair, issued the following statement:
“Kenya’s growth remained resilient in the face of increasing external and domestic challenges. The EFF/ECF and RSF arrangements continue to support the authorities’ efforts to sustain macroeconomic stability, strengthen policy frameworks, withstand external shocks, push forward key reforms, and promote more inclusive and green growth.
“Kenya’s performance under the ECF/EFF arrangements have been mixed with adherence to quantitative targets being broadly satisfactory. The authorities have made welcome progress in some key areas, including governance and public financial management. Continued implementation of corrective measures to address missed targets and accelerated reforms will be important.
“The authorities’ commitment to fiscal consolidation while protecting essential social and developmental spending should support efforts to bring down the debt burden toward the new debt anchor of 55 percent of GDP in present value terms by 2029. Implementation of the Medium-Term Revenue Strategy would be key to reverse the erosion in the tax base while promoting equity and fairness in the tax regime and create more space for spending to improve public services. Risks to planned fiscal consolidation should be monitored and contingency plans promptly activated as needed. Effective communication of fiscal policy objectives would support efforts at easing financing pressures.
“Monetary policy has demonstrated its ability to react to inflation shocks and anchor expectations. The Central Bank of Kenya should continue to act decisively to ensure that inflation converges firmly to the target. Strengthening of the monetary policy framework would support price stability and external sustainability. The exchange rate should be allowed to respond flexibly to market conditions. Recent measures at facilitating greater exchange rate flexibility should help ease FX market dysfunction and support a buildup of FX reserves. The banking system is generally sound, but emerging vulnerabilities need close monitoring.
The approval of the new IMF money followed a staff-level agreement reached with Kenyan officials in November, with slight differences in dollar values due to currency fluctuations in the IMF Special Drawing Rights unit of account.
