The International Monetary Fund (IMF) Executive Board on December 19, 2022, completed the Fourth review of the Extended Fund Facility (EFF) and Extended Credit Facility (ECF) arrangements with Kenya, providing the country with access to about Ksh55.1 billion ($447.9 million).
Mary Goodman, Kenya’s Mission Chief at the IMF says the country secured the loan to help remain resilient in the face of global shocks and drought.
“The IMF Board’s action includes about $215 million in additional low-cost financing, bringing the size of Kenya’s IMF program to about $2.4 billion,” said Goodman.
The EFF/ECF arrangements (approved on April 2, 2021), IMF notes, aim to support Kenya’s program to address debt vulnerabilities and the authorities’ response to the COVID-19 pandemic and global shocks and to enhance governance and broader economic reforms.
“The program is delivering results; increased tax revenue and careful spending are stabilizing debt as a share of GDP well below levels originally projected. Kenya accomplished this because of a strong commitment from the Ruto administration facing pending bills last year and unbudgeted spending from early this year. They took bold action. They fully phased out petrol subsidies, and they’re finding cost savings to hold this year’s deficit below the budgeted level,” noted Goodman.
Foreign exchange reserves
However, Kenya’s structural reform agenda is advancing, albeit with some delays.
Kenya’s Mission Chief at the IMF in the statement pointed out that the country still faces high global prices for food and fertilizer and that the US dollar has been very strong against most global currencies.
“In this difficult period, monetary policy and exchange rate flexibility have an increased role to play. Steps to revitalize the foreign exchange market are also important and will help support Kenya’s foreign exchange reserves,” said Goodman.
She noted that the IMF review has also seen progress in governance with new details on the owners of firms that win government contracts being posted on the public procurement website.
“More work still lies ahead, though, to strengthen Kenya’s anti-money laundering framework and reform state-owned enterprises,” Goodman said.
“The economy remains resilient in the face of global challenges, and the IMF welcomes our continued partnership with Kenya,” she added.
