The IMF has agreed to disburse Sh52.8 billion, equivalent to $433 million to Kenya as part of a $2.34 billion loan approved in May last year.
“The agreement is subject to the approval of IMF management and the Executive Board in the coming weeks,” IMF’s team led by Mary Goodman and Tobias Rasmussen said in a statement.
“Upon completion of the Executive Board review, Kenya will have access to USD433 million, bringing the total IMF financial support under these arrangements to US$1,548 million,” IMF said in a statement.
The funds will assist Kenya to cover external financing needs resulting from drought and challenging global financing conditions.
The lender termed Kenya’s economy as resilient in the face of a challenging environment.
“The Kenyan economy has been resilient in the face of a challenging environment. Food insecurity has increased on severe drought in parts of the country. Higher food and energy prices have pushed up inflation and pressured the external position,” the IMF said.
There has been satisfactory progress on fiscal adjustment needed to address debt vulnerabilities though pressures remain elevated.
“The overall deficit on cash basis declined from 8.2 per cent of GDP in FY2020/21 to 6.2 percent of GDP in FY2021/22,” said IMF.
The lack of funds contributed to 0.7 per cent of GDP in unpaid obligations that were carried over to FY2022/23.
“Significant unbudgeted spending in the early months of this fiscal year, much of it for fuel subsidies, poses an additional challenge,” it said.
To access the loan, Kenya is expected to continue with structural and governance reforms.