Kenya misses out on IMF food relief billions amid price surges

Concept of IMF loans. [Getty Images]

Kenya will not be eligible for emergency loans announced this week by the International Monetary Fund (IMF) to help vulnerable countries cope with food shortages and rising costs stemming from Russia's war in Ukraine.

The IMF said its new Food Shock Window will be open for one year through its existing Rapid Credit Facility and Rapid Financing Instrument programmes.

It will be for countries with "urgent balance of payment needs" and that "are suffering from acute food insecurity, a sharp food imports shock, or from a cereals export shock."

The IMF's announcement did not mention any specific countries that would be eligible for the low-condition emergency loans under the new window.

However, The Saturday Standard has learned that Kenya, which is battling high inflation pressures from a surge in food and consumer prices, is excluded from the facility, which will be a blow for the new government' efforts to address food insecurity.

An IMF spokesperson told The Saturday Standard in an interview on Thursday that Kenya is among the estimated more than 25 countries in Sub-Saharan Africa severely affected by global food shocks and meeting the criteria ="https://www.standardmedia.co.ke/business/financial-standard/article/2001295244/looming-economic-meltdown-should-kenya-miss-imf-facility">established for the Global< Food Shocks Window.

However, the spokesperson added that the initiative is being created to "respond to critical needs and to complement the IMF's existing toolkit."

"As such, countries already engaged with the IMF through active borrowing programmes that are on track - like Kenya has, with its economic programme supported by the arrangements under the Extended Fund Facility (EFF) and Extended Credit Facility (ECF) - would not qualify to use the new facility," the spokesperson said.

Kenya will, however, be able to request for increased access to financing under its existing loan programmes, the IMF said.

Kenya has a 38-month loan arrangement with the IMF, which was worth $2.34 billion (Sh282.1 billion) when it was approved in April 2021.

"Financing needs for those countries should be addressed within the framework of their existing programmes, including through augmentation where relevant," said the IMF spokesperson.

With the new emergency food shock financing, the IMF aims to try to ease war-induced shortages that are fast becoming the worst food security crisis since at least the 2007-2008 global financial meltdown, leaving lives and livelihoods of 345 million people in immediate danger, and a $9 billion (Sh108 billion) increase in import bills for the most exposed countries.

"For some time now, the combination of climate shocks, the pandemic and regional conflicts has disrupted food production and distribution, driving up the cost of feeding people and families," IMF Managing Director Kristalina Georgieva said in a statement.

Exposed to crisis

Ms Georgieva said separately that ="https://www.standardmedia.co.ke/business/article/2000180943/kenya-seeks-review-of-imf-standby-loan-facility">48 countries around the world< are particularly exposed to the food crisis.

"Of the 48 countries, about 10-20 are likely to be asking (for emergency assistance)," she said, adding that "quite a lot of them" are in Sub-Sahran Africa.

"We are here for you," she promised members.

Kenya in July received a Sh7.56 billion loan from the African Development Bank (AfDB) to support fertiliser and seeds acquisition for 650,000 local farmers to boost food production and control consumer price inflation.

The loan was part of the AfDB's $1.5 billion (Sh180 billion) African Emergency Food Production Facility, an continent-wide initiative to avert a looming food crisis exacerbated by the war in Ukraine.

Kenya is yet to draw down the AfDB loan, which entails the delivery of certified seeds, fertiliser and agricultural extension to 650,000 farmers to boost productivity.