Treasury Cabinet Secretary Njuguna Ndung'u on Thursday, June 15, revealed that the President William Ruto-led administration has requested a Ksh57 billion loan from the International Monetary Fund (IMF) to contribute to the government's efforts to lower the cost of living.
While reading his maiden Budget 2023/2024 in Parliament, Ndung'u noted that the IMF board would review the request and if approved, Kenya will access the funds by July 2023.
He noted that the funds would be incorporated into the current Extended Fund Facility (EFF) and Extended Credit Facility (ECF) programs.
Further, the country would receive an additional Special Drawing Rights (SDR) of Ksh433 million under the Resilience and Sustainability Facility (RSF) arrangement.
"Kenya has continued to successfully implement Extended Fund Facility (EFF) and Extended Credit Facility (ECF) arrangements supported by IMF. We concluded the fifth review program in May 2023 and agreed on augmentation of access under the program of 75 per cent of the quarter (Special Drawing Rights)," he noted.
Ndung'u explained that the ECF arrangement would be extended to April 2025 to allow the government to meet the program objectives. On the other hand, the RSF program was slated for 20 months and would run in tandem with ECF and EFF.
He added that once allocated, the cumulative IMF disbursement would amount to an average of Ksh279 billion ($2.01 billion).
Economy
Ndung'u expressed confidence that the economy would rebound and expand by 5.5 per cent in 2023 - up from the current 4.8 per cent. He attributed the projected growth to the continued strong performance of the services sector and recovery of the agricultural sector due to improved weather conditions.
According to the Treasury CS, the government would also support economic recovery by pursuing prudent economic measures geared towards reducing debt vulnerabilities and supporting sustainable development.
He noted that government projections indicate that the inflation rate is expected to shrink from the current 8.78 per cent to 7.5 per cent. This, he observed will be driven by the government's efforts to strengthen the shilling and lower fuel prices which will subsequently lower the cost of basic commodities.
The CS listed the measures prioritised by the government to lower the cost of living including the provision of subsidised fertiliser to farmers, improving exports, and continued investments in the private sector coupled with the easing of international commodity prices.
Note:
EFF is a program that provides financial assistance to countries facing dire problems in balancing payments due to structural weaknesses that require time to address. IMF normally provides a longer repayment period to assist the countries.
ECF is a program equivalent to EFF but is provided to low-income countries with prolonged debt problems.
RSF, on the other hand, provides affordable long-term financing to countries undertaking reforms to reduce debt-risk factors as well as the incorporation of adaptive climate change measures.
