IMF Changes Stance in Ksh29 Billion Loan Extension to Kenya – Kenyans.co.ke
Kenya has been cleared to receive another Ksh29 billion by the International Monetary Fund (IMF) after a two-week hiatus.
IMF had delayed the disbursement, urging Kenya to seek the loan elsewhere. The delay was occasioned by a postponed meeting where approval of the facility was to be discussed.
Its board will meet on July 18, 2022, to approve the loan, which forms part of Ksh255.9 billion credit facility ($2.34 billion, in 2021 currency exchange) approved in February 2021.
The third tranche facility is expected to take total disbursements from the three-year loan program to Ksh.141.7 billion.
It will, however, derail Kenya’s exchequer plan to implement the current 2022/23 financial year budget. Treasury expected the funds to arrive before the close of FY 2021/22.
“The modest delay in the timing of the anticipated IMF financing could be mitigated by securing an alternative source of financing,” an IMF spokesperson stated.
In April 2022, government officials drawn from the National Treasury and the Office of the President held talks to review the IMF Extended Fund (EFF) Facility and Extended Credit Facility (ECF).
“IMF staff and the Kenyan authorities have reached a staff-level agreement on economic policies to conclude the third review of the 38-month EFF/ECF financed program. Kenya would have access to about Ksh29 billion in financing once the review is formally completed by the IMF Executive Board.
“The agreement is subject to the approval of IMF management and the Executive Board in the coming weeks,” read in part the statement from the April meeting.
At the time, the IMF had noted that President Uhuru Kenyatta’s administration had taken steps in addressing the ballooning public debt through various reforms that have seen the country witness an increase in revenue collection.
While approving the Ksh255.9 facility in April 2021, IMF listed tough conditions. Among them was Kenya restructuring nine state-owned corporations as one of Kenya’s commitments to the facility.
This includes the national carrier, Kenya Airways(KQ), Kenya Power and Lighting Company (KPLC), Kenya Electricity Generating Company (KenGen), and Kenya Ports Authority (KPA).
Others were the three largest public universities, the University of Nairobi, Kenyatta University and Moi University.
According to IMF, profits recorded by public entities declined by a third to Ksh.62.5 billion during the 2019/2020 fiscal year on account of reduced profits and losses.
Implementation of these reforms is what IMF has been evaluating every six months over the 38-month programme to allow the release of more resources.