Kenya is set to received Ksh. 142 billion loan from the International Monetary Fund (IMF) to meet its budgetary expenses.
IMF approved the loan on July 17, 2023, after its Executive Board completed the fifth review under the Extended Fund Facility (EFF) and the Extended Credit Facility (ECF) arrangements for Kenya.
In a statement, the IMF Deputy Managing Director, and Acting Chair Antoinette Sayeh stated that; “Kenya’s economy has been resilient despite the worst drought in many decades and a difficult external environment.”
“The ECF and EFF arrangements continue to support the authorities’ efforts to address emerging challenges to sustain macroeconomic stability and market confidence, promote growth, and advance ongoing reforms.” She added.
To support Kenya’s ambitious efforts to build resilience to climate change, Kenya will also receive, Ksh US$551.4 million under the Resilience and Sustainability Facility (RSF).
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Likewise, the IMF board approved an extension of the EFF/ECF arrangements from the current 38 months to 48 months to allow adequate time for implementing the authorities’ reform agenda and realizing the program’s key objective and an augmentation of access amounting to 75 percent of quota (SDR407.1 million) over the extended program duration for balance of payments support.
Government Set to Raise More Revenue
Nonetheless, President William Ruto’s administration is set to improve the country’s finances by raising more revenue and reducing borrowing.
As such, Sayeh noted that the approval of the FY2023/24 Budget and 2023 Finance Act are crucial steps to support ongoing consolidation efforts to reduce debt vulnerabilities while protecting social and development expenditures.
She however, called for contingency plans that can be quickly deployed to ringfence fiscal performance going forward to address the recent challenges in resource mobilization and elevated uncertainty.
“Tighter financing conditions also require a prudent debt policy and continued efforts to prioritize concessional loans.” She stated.
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In addition, the IMF deputy MD said the reforms under the RSF program are aimed at advancing Kenya’s already strong track-record at addressing climate-related challenges.
According to Sayeh the reforms will advance efforts to incorporate climate risks into fiscal planning and the investment framework, reduce emissions through carbon pricing, enhance Kenya’s existing frameworks to mobilize climate finance; and strengthen disaster risk reduction and management.
