A month after the IMF approved a Sh257 billion loan amid a public outcry over Kenya’s ability to repay the piling debt load, the lender has cleared a second disbursement to Nairobi.
The International Monetary Fund (IMF) yesterday announced that its executives had completed their pre-disbursement engagements with Kenyan officials and approved another Sh44.2 billion tranche to be wired to the Central Bank of Kenya (CBK), as part of the 38-month program.
This now brings the total amount advanced to Kenya in the first three months of the facility to Sh77.9 billion.
The approval of the second batch, expected to hit Kenya’s accounts by next month, means that IMF is satisfied with the reforms being implemented by Kenyan government since the loan is tied to some specific performance conditions.
The lender said its staff team, led by Ms Mary Goodman, conducted a virtual mission to Kenya from April 29 to May 14, 2021.
The team discussed progress on reforms and the authorities’ policy priorities within the context of the first review of Kenya’s economic program supported by the IMF’s Extended Fund Facility (EFF) and Extended Credit Facility (ECF) arrangements.
"The IMF staff team and the Kenyan authorities have reached a staff-level agreement on the first review of Kenya’s economic program under the Extended Fund Facility (EFF) and Extended Credit Facility (ECF)," Ms Goodman said at the conclusion of the mission.
Misuse of previous funds
"The agreement is subject to the approval of IMF management and the Executive Board in the coming weeks. Upon completion of the Executive Board review, Kenya would have access to SDR 285 million (equivalent to about US$410 million)," she said.
The remaining loan is expected to be disbursed every six months after IMF reviews.
Though IMF loans come relatively cheaper and are seen in international capital markets as an endorsement of the credit worthiness of a country, this latest loan from the IMF elicited opposition from Kenyans online, who signed a petition asking the Bretton Woods institution to stop loaning the country due to misuse of previous funds. Over 235,000 Kenyans had signed the petition by yesterday.Kenya received the first tranche of Sh33.7 billion in April as it signed on a raft of painful structural reforms including reversal of tax reliefs, removing tax exemptions on some consumer goods, restructuring of loss making parastatals as well as dealing with the debt nightmare."The structural reform agenda during the first phase of the program will address […]
