Kenya has received a Sh144.4 billion loan from the International Monetary Fund (IMF).
The loan was signed off on Monday, July 17.
The injection is expected to boost Kenya’s finances as the government seeks to bridge the gap between the budget and the available funds for use.
“The IMF Executive Board completed the fifth reviews under EFF/ECF arrangements for Kenya, allowing for an immediate disbursement equivalent to Sh58.7 billion,” it said in a statement. Part of the funds, Sh15.5 billion are from augmentation of access.
The Board also approved a 20-month arrangement under the Resilience and Sustainability Facility (RSF) of Sh88.9 billion.
This will help Kenya in her repayment process by helping the country to do it sustainably as well as in its climate reform projects.
The funds are expected to support the country build its resilience to climate change and catalyse further private climate financing.
IMF also approved an extension of the fund and credit arrangements from the current 38 months to 48 months through April 1, 2025.
The extension will give Kenya sufficient time to implement the authorities’ reform agenda and realize the program’s key objective and augmentation of access amounting to 75 per cent over the extended program duration for the balance of payments support.
“Kenya's economy has been resilient despite the worst drought in many decades and a difficult external environment,” IMF Deputy Managing Directory Antoinette Sayeh said in a statement.
She said that the Central Bank of Kenya’s commitment to a data dependent policy stance is essential to keep inflation expectations anchored.
“The CBK should also continue taking appropriate steps to strengthen its reserves position and deepen the FX market while allowing exchange rate flexibility as a shock absorber.”
Sayeh lauded Kenya’s 2023-2024 budget and the 2023 Finance Act saying they are crucial steps to support ongoing consolidation efforts to reduce debt vulnerabilities while protecting social and development expenditures.
“However, recent challenges in resource mobilization and elevated uncertainty call for contingency plans that can be quickly deployed to ringfence fiscal performance going forward.”
“The reforms under the RSF program are expected to advance Kenya’s already strong track record at addressing climate-related challenges,” said Sayeh.
According to her, the reforms will promote integration of climate risks into fiscal planning and investment strategies, curb emissions by implementing carbon pricing measures, bolster Kenya's existing mechanisms to mobilize climate finance and reinforce disaster risk reduction and management initiatives.