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The International Monetary Fund (IMF) has approved a request from the Kenyan government for a Ksh.78 billion loan to help improve its fiscal policies.
This decision follows a meeting to review the seventh and eighth evaluations, which had been interrupted in early June due to anti-government protests.
The IMF expressed optimism that the funds would assist in addressing Kenya’s economic recovery challenges.
Currently, the IMF is engaged in three programs with Kenya: the Extended Fund Facility (EFF), the Extended Credit Facility (ECF), and the Resilience and Sustainability Facility (RSF).
The EFF and ECF programs provide financial aid to countries facing difficulties in managing inflation due to structural issues, with EFF allowing for a four-year restructuring period and ECF potentially extending to five years. In contrast, the RSF is aimed at supporting climate initiatives.
Kenya will now receive Ksh.62.5 billion through the EFF/ECF and Ksh.15.4 billion through the RSF. The IMF highlighted the country’s fiscal difficulties, including a tax revenue shortfall in the previous financial year and the withdrawal of the Finance Bill 2024 following significant Gen Z protests.
The IMF believes that through the EFF/ECF program, Kenya can bolster its economic position. At the meeting’s conclusion, Gita Gopinath, the IMF’s Deputy Managing Director, emphasized the board’s commitment to helping Kenya build resilience against economic shocks and manage climate-related challenges.
“Kenya’s economy is resilient, with growth surpassing the regional average, inflation decreasing, and external inflows supporting the shilling and building external reserves, despite challenging socio-economic conditions,” she noted.
“The EFF/ECF and RSF arrangements will continue to assist the government in achieving macroeconomic stability, reducing debt vulnerabilities, promoting reforms, and addressing climate risks.”
The IMF partnership began in April 2021 under former President Uhuru Kenyatta and then Deputy President William Ruto. President Ruto’s administration is expected to extend this program when it concludes in April 2025.
