The International Monetary Fund (IMF) on Thursday, January 17, approved a Ksh150 billion (USD941.2 million) loan for Kenya albeit with two conditions.
President William Ruto’s administration will receive with immediate effect ksh109 billion ($684.7 million) of the total loan sum, with its usage closely monitored by the IMF.
The disbursement was made under the Extended Fund Facility (EFF) and Extended Credit Facility (ECF) programs according to a statement from the international financial institution.
“The Executive Board of the IMF concluded today the 2023 Article IV consultation with Kenya together with the sixth reviews and augmentations of access of USD941 million under the extended arrangements under the EFF and the ECF, approved in April 2021 and extended by 10 months in July 2023 to April 2025, and the first review under the 20-month Resilience and Sustainability Facility (RSF) arrangement, approved in July 2023,” the approval statement from IMF read in part.
One of the conditions of the loan is that it be used to implement the nation’s economic reforms.
IMF noted that this was key in maintaining macroeconomic stability, strengthening debt sustainability, and building buffers against shocks.
“The Kenyan economy remains resilient against a challenging global backdrop even as it recovers from the legacy of the COVID-19 pandemic and the worst multi-season drought over the past two years,” IMF noted.
On the second condition, a part of the sum will be used towards implementing climate policies and the nation’s preparedness towards pandemics.
Ksh9.5 billion under the RSF arrangement will be used for the implementation of policies to mitigate the ravages of climate change.
Progress on the authorities’ climate agenda, including RSF-supported reforms, will not only prepare the country well against future climate shocks but also help attract climate finance to support these further efforts,” IMF stated.
IMF commented on President Ruto for implementing austerity measures without jeopardising essential social and developmental projects.
The body noted that Kenya was on the right path to bring down the debt burden toward the new debt anchor of 55 per cent of GDP in present value terms by 2029.
The loan disbursement was made a few hours after Ruto castigated his predecessor Uhuru Kenyatta for taking a Ksh300 billion Eurobond in 2014 which must be paid in June 2024.
He remarked that this had thrown Kenya into a debt pitfall making it hard to invest in development projects.
Part of the sum disbursed by the IMF will go towards repaying the Eurobond.
