The conversation between Kenyan officials and representatives from the International Monetary Fund yielded a welcome result for the Kenyan government.
The executive board of the IMF recently approved a $447.39 million loan to Kenya to help buffer the country’s foreign exchange reserves which had fallen to just 3.98 months of import cover below the legal threshold of four months.
Kenya’s economic stability and projected fiscal growth eased the IMF’s decision to grant the loan. However, the IMF showed concerns about Kenya’s ability to tackle climate-change effects.
The IMF deputy managing director, Antoinette Sayeh, stated, “Kenya’s commitment to its economic programme supported by the Fund’s EFF and the ECF 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. Mutually reinforcing prudent macroeconomic policies and resolute implementation of structural reforms remain essential to safeguard positive medium-term prospects.”
She also lauded some of the initiatives of the current administration, including the elimination of fuel subsidies and the country’s current return on tax.
“Looking ahead, continued strong commitment to fiscal consolidation over the medium term remains key to reducing debt vulnerabilities. Additional tax policy measures, anchored in a medium-term revenue strategy to secure space for needed social and development spending, and improved spending efficiency, revenue administration, and public financial and debt management will be key,” she said.
This new loan follows the fourth review of the $2.34 billion (Ksh288 billion) 38-month Extended Credit Facility (ECF) and the Extended Fund Facility (EFF) arrangements with Kenya.
