The International Monetary Fund (IMF) has given the green light for a substantial financial boost to Kenya, approving a $941 million (Sh.150 billion) lending package.
Immediate relief comes in the form of a disbursement of $624.5 million (Sh.99.6 billion), provided under the Extended Fund Facility (EFF) and Extended Credit Facility (ECF) programs.
Additionally, the Resilience and Sustainability Facility (RSF) arrangement will release $60.2 million (Sh.9.6 billion).
The approval by the executive board means that the IMF’s total commitment to Kenya across all three facilities now exceeds $4.4 billion (Sh.701.8 billion).
Despite facing both external and domestic challenges, Kenya’s growth has demonstrated resilience, according to a statement by the IMF.
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In the wake of acute liquidity challenges and uncertainties regarding accessing financial markets before a significant $2 billion (Sh.319 billion) Eurobond matures in June, the IMF funds provide a crucial lifeline for Kenya.
The government, anticipating funds from the World Bank and regional banks such as the African Export-Import Bank and Trade & Development Bank, intends to use the IMF funds to meet the impending foreign debt maturity without depleting its hard currency reserves.
The IMF highlighted that Kenya’s balance of payments and financial positions have been strained by the lingering impacts of the COVID-19 pandemic and recurrent climate change-induced droughts.
Concurrently, the country’s currency, the shilling, has experienced a decline in value.
The approval of this new funding from the IMF follows a staff-level agreement reached with Kenyan officials in November, with slight variations in dollar values due to fluctuations in the IMF Special Drawing Rights unit of account.