The International Monetary Fund (IMF) Executives on Thursday, March 18, approved a $2.4 billion (Ksh263 billion) loan that Kenya had been waiting for to help in economic recovery.
The loan was issued on a combined arrangement under the Extended Fund Facility and Extended Credit Facility which the IMF said is low-cost financing. IMF said that Kenya was on an economic recovery track thus justifying the approval of the loan.
“Kenya’s economy is now picking up speed after the COVID-19 shock, but the pandemic has left deep imprints on the country’s fiscal and debt positions,” IMF’s statement read.
According to the IMF report, the new programme which will last for three years, is set to support the next phase of the government's COVID-19 response.
“Without this help, Kenya would have to aggressively cut spending on investment and social programmes, making it more difficult to achieve a durable and inclusive recovery,” the statement further read.
Another reason for the approval is that the government has already begun reversing some of the counter-measures it had taken to help minimize the spread of the Covid-19 pandemic such as the tax cuts that ended in January.
Kenya is also expecting other development partners to provide concessional financing fencing even as Uhuru’s government continues to take economic precautionary measures.
The approval comes after the primary agreement by representatives team from the IMF and others from Kenya conducted a survey towards the end of 2020 and was concluded on February 15.
The teams further suggested that the loan would extend for a period of 38 months from the day of signing of the agreement.
During their submission, Mary Goodman who was representing the IMF, said that part of the loan would be used to help in reducing the debt, while setting pace for economic recovery after the adverse effect of Covid-19.
“The programme will support the next phase of the country’s COVID-19 response and the authorities’ plans for a strong multi-year effort to stabilize and begin reducing debt levels relative to GDP,” Goodman said.
This will become the second loan the IMF is issuing to Kenya after another loan that was issued in May 2020.
