NAIROBI, Kenya, July 19 – The International Monetary Fund (IMF) has approved USD 235.6mn (Sh28 billion) loan which will be directed towards budgetary support, to improve governance and support broader economic reforms.
This becomes the final tranche of the funds issued under the 38-month under the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF) which now totals USD 1,208.2mn
The agreement is aimed at supporting Kenya’s program to address debt vulnerabilities, the authorities’ response to the COVID-19 pandemic and global shocks resulting from the war in Ukraine, as well as to improve governance and support broader economic reforms.
The review for Kenya which was approved by the lender on April 2, 2021 focused on discussing progress on reforms and policy priorities undertaken by the Uhuru Kenyatta-led Government.
Antoinette Sayeh, Deputy Managing Director and Acting Chair of IMF Executive Board, in her remarks, lauded the state for its sustaining “Strong fiscal performance through strong tax revenues’ but emphasized the need to“Maintain the momentum in structural reform agenda.”
“Strong fiscal performance is providing a welcome resilience. Looking ahead, the authorities should sustain their fiscal consolidation efforts to reduce debt vulnerabilities, while securing space for needed social and development spending. This requires further improving spending efficiency and undertaking additional tax policy and revenue administration measures drawing from the forthcoming Medium-Term Revenue Strategy,” Sayeh said.
In order to cushion Kenyans from higher fuel prices, IMF urged the Government to also implement targeted programs to support vulnerable households.
” Although the authorities are adjusting domestic fuel prices to international levels more gradually, more targeted programs to support vulnerable households should accompany the ongoing review of the fuel pricing mechanism and plans for reforms to ensure that pricing actions are always aligned to the approved budget,” the lender pointed
In its remarks, IMF also lauded the Central Bank of Kenya’s monetary policy tightening which is pegged on a flexible exchange rate, it urged the regulator to be ready to adjust its stance to limit second-round effects from higher food and fuel prices and to keep inflation expectations well-anchored.
The Kenyan Government was also urged to continue restructuring Kenya Airways and restore the long-term viability of Kenya Power and Lighting Company.
“Further improvements in the anti-corruption framework and the AML/CFT agenda, as well as an effective follow-up of expenditure audits, are needed to enhance transparency and accountability,” the lender added.
