The International Monetary Fund (IMF) has said it has disbursed about 55-billion-Kenyan shilling (about 447.39 million U.S. dollars) loan to Kenya for budget support.
The IMF said the funding is part of a 2.34-billion-U.S. dollar extended credit facility (ECF) and extended fund facility (EFF) agreed to by the IMF in April 2021 to support Kenya’s program to address debt vulnerabilities, response to the COVID-19 pandemic and global shocks resulting from the war in Ukraine, as well as to improve governance and support broader economic reforms.
Antoinette Sayeh, deputy managing director of the IMF said in a statement issued on Monday evening that Kenya’s commitment to its economic program supported by the ECF and EFF arrangements is anchoring debt sustainability.
Sayeh said 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.
“Mutually reinforcing prudent macroeconomic policies and resolute implementation of structural reforms remain essential to safeguard positive medium-term prospects,” she added.
The money was approved after the IMF executive board completed the fourth review of the 38-month arrangements under the ECF and EFF arrangements.
According to the IMF, Kenya’s economy remains resilient against a challenging global backdrop and is projected to grow 5.3 percent in 2022, with inflation moving above the Central Bank of Kenya’s target band in June and is expected to peak in early 2023.
“Despite double-digit export growth, the current account is expected to widen on higher global oil prices in 2022. Downside risks predominate in the near term, while Kenya’s medium-term outlook remains favorable although climate-related risks are elevated,” the IMF said.
The IMF said a lower projected path of foreign exchange reserves reflects financing shortfalls last fiscal year and planned cuts in foreign-financed projects during the Fiscal Year 2022/23, adding that reserves remain adequate at three months of imports, gradually increasing over the medium term.
Sayeh said continued strong commitment to fiscal consolidation over the medium term remains key to reducing debt vulnerabilities. Enditem