WASHINGTON— Kenya has secured the immediate release of Ksh 27.8 billion ($235.6 million) from the International Monetary Fund (IMF) to shore up its budgetary needs.
The loan which is the third review under the 38-month arrangement with the lender was approved Monday by the IMF Executive Board and brings the total amount disbursed to Ksh 142.7 billion ($1.2 billion).
Under the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF) arrangements reached between Kenya and the IMF in April last year , Kenya is entitled to receive a total of Ksh 276 billion ($2.34 billion) within a three year period.
“Kenya’s economic programme supported by the Fund’s Extended Fund Facility and the Extended Credit Facility arrangements is providing an essential policy anchor to debt sustainability and public confidence. Despite the resilient economic recovery, the programme remains subject to downside risks, including from deeper disruptions from the war in Ukraine, unsettled global market conditions, and an increase of food insecurity. In this context, the authorities’ continued steadfast commitment to prudent policies and advancing structural reforms remains essential to maintain macroeconomic stability and safeguard Kenya’s positive medium-term prospects,” said Antoinette Sayeh, IMF Deputy Managing Director.
Despite giving a favourable outlook in the medium-term, IMF projects a GDP growth of 5.7pc this year dented by rising inflation which is projected to ease in 2023, uncertainties from the Russia-Ukraine war, continuing drought in the semi-arid regions, unsettled global financial market conditions and the coming general election slated for Aug 9.
While there has been a strong performance in revenue collection which has support fuel subsidy programmes to cushion vulnerable groups, IMF warns that the measures should be within budget.
“Strong fiscal performance is providing a welcome resilience. Although the authorities are adjusting domestic fuel prices to international levels more gradually, program targets are still being met thanks to strong tax revenues. Nevertheless, more targeted programs to support vulnerable households should accompany the ongoing review of the fuel pricing mechanism and plans for reforms to ensure that pricing actions are always aligned to the approved budget,” added Sayeh.
IMF is also advising the National Treasury to sustain fiscal consolidation efforts through efficient spending and additional tax measures to reduce debt vulnerabilities and release fund needed for social and development spending.
Source: NAM NEWS NETWORK