The International Monetary Fund (IMF) plans to release $433 million (Sh52.66 billion) “in the coming weeks” to finance Kenya's budget and help the new administration fight drought.
This is after a delegation of IMF staff expressed satisfaction with Nairobi’s economic reforms in the face of a fresh economic slowdown.
The multilateral lender said the new President Ruto's administration has expressed a strong commitment to the IMF-supported programme first inked last year under the previous Uhuru Kenyatta regime.
The lender's staff visiting staff said they were satisfied with the progress that the government is making in its economic reform programmes.
Under the deal, which now awaits endorsement by the Fund’s management and board, Kenya will access $433 million (Sh52.66 billion), bringing the total IMF support so far in a 38-month financing facility to $1.548 billion (Sh188.2 billion) under the Extended Fund Facility (EFF) and Extended Credit Facility (ECF).
The cumulative 38-month arrangement was worth $2.34 billion (Sh284.5 billion) when it was first approved in April last year under retired President Uhuru's administration.
“The IMF staff team and the Kenyan authorities have reached a staff-level agreement on the fourth review of Kenya’s economic programme under the EFF and ECF arrangements. The agreement is subject to approval of IMF management and the Executive Board in the coming weeks," said the IMF team led by IMF Kenya Mission Chief Mary Goodman and Resident Representative, Tobias Rasmussen.
"Upon completion of the Executive Board review, Kenya would have access to SDR 336.54 million (equivalent to about $433 million), bringing the total IMF financial support under these arrangements to SDR1,202.31 million (equivalent to about $1,548 million) (Sh188.2 billion)."
SDRs (special drawing rights) are monetary reserve currencies created by the International Monetary Fund to supplement its member countries' official reserves.
The IMF revealed the latest amount includes proposed augmentation or an additional borrowing request that will see Kenya access SDR162.84 million ($210 million or Sh25.5 billion) to cover external financing needs resulting from drought and challenging global financing conditions.
Over four million Kenyans lack access to food and water and are facing acute hunger and starvation as a prolonged drought ravages the country.
The IMF projects the Kenyan economy to grow at 5.3 per cent this year amid domestic policy tightening and a global slowdown that are likely to also weigh on growth in 2023.
The economy grew by six per cent year-on-year in the first half of 2022, supported by services sector activity amid a decline in agricultural output.
"The economy remains broadly resilient. However, volatile international commodity prices, tighter external financing conditions, higher inflation, global slowdown in growth, and continued drought have created a challenging backdrop for economic policymaking," said the IMF.