The Executive Board of the International Monetary Fund (IMF) has approved the disbursement of $108.5 million (Sh9 billion) to support Kenya’s balance of payment position.
The amount constitutes the fifth tranche of the $760.6 million (Sh63.12 billion) three-year Extended Credit Facility (ECF) arrangement approved in January 2011.
The latest payment brings the Fund’s total disbursement to Kenya under the ECF to $628.2 million (Sh52.14 billion).
In a statement yesterday, the IMF Board noted that Kenya has stayed the course in its economic reforms with good results, taming inflationary pressures, bolstering forex reserves and reducing the external current account deficit.
It also lauded the reduction in the public debt to gross domestic product ratio, despite the large budgetary costs of implementing the Constitution, preparing for the March elections and the recent wage increases in the civil service.
Performance
“Performance under Kenya’s economic programme was favourable through end-December last year. The fiscal outcome was in line with the programme, international reserves exceeded the target, while monetary policy was eased appropriately.”
ECF is an IMF programme created under the Poverty Reduction and Growth Trust aimed at making the Fund’s financial assistance customised for low income countries.
Through ECF, countries with protracted balance of payments problems are provided with assistance.
IMF noted that Kenyan authorities have made good progress in public financial management and tax reform, adding that financial sector reforms and pay for civil servants have also recently advanced.
“Stronger growth is expected in 2013, supported by good weather conditions. With firmer expectations of low inflation, there is scope for further monetary easing, although the Central Bank of Kenya will need to remain vigilant to the risks of possible adverse shocks or a reversal of capital flows,” said IMF.
The IMF said the risks from global financial and economic conditions have lessened and the prospects for commercially viable oil discoveries could further improve the medium to long-term outlook.
