IMF gives Kenya Sh55.1 billion loan

The National Treasury building in Nairobi. [Elvis Ogina, Standard]

The International Monetary Fund (IMF) has granted a loan to Kenya worth $447.39 million (Sh55.1b) under the Extended Credit Facility and Extended Fund Facility arrangements.

In a press statement on the lender's website, the IMF Board said the loan will help Kenya meet its budget deficit.

Kenya's fiscal deficit currently stands at nearly Sh1 trillion against its Sh3.3 trillion budget for the Financial Year 2022/2023.

"The Board's decision enables immediate disbursement of US$447.39 million (Sh55.1 billion) usable for budget support," said the IMF on Monday, December 19.

Kenya now owes the lender a total of Sh297.6 billion, with the country's cumulative debt - internal and external - being Sh8.6 trillion.

"Kenya's economy remains resilient against a challenging global backdrop and is projected to grow 5.3 percent in 2022. Inflation moved above the Central Bank of Kenya's (CBK) target band in June and is expected to peak in early 2023," said the IMF.

The IMF also expressed confidence in Kenya's commitment to handle its public debt obligations.

"With progress on fiscal consolidation, public debt has begun leveling off. Taxes performed strongly in the Financial Year 2021/22, while spending was compressed on shortfalls in external commercial financing, leading to an over-performance of 1.7 percent of GDP in the primary deficit."

Antoinette Sayeh, the Deputy Managing Director and Acting Chairperson of the IMF Board, lauded Kenya's commitment to manage its debt despite economic shocks.

"Kenya's commitment to its economic program supported by the Fund's Extended Fund Facility and the Extended Credit Facility arrangements is anchoring debt sustainability. The economy has performed well amid slowing global growth, tighter financing conditions and volatile commodity prices, while the continuing drought has increased food insecurity, and climate-related risks pose ongoing challenges," said Sayeh.

"Mutually reinforcing prudent macroeconomic policies and resolute implementation of structural reforms remain essential to safeguard positive medium-term prospects," added Sayeh.

The IMF has projected a 5.1 per cent GDP growth and 7.8 per cent inflation average in 2023.