IMF approves sh153b emergency loan for Kenya

Kenya has secured two precautionary loan facilities from the International Monetary Fund worth an estimated Sh153 billion.

According to the IMF, the national Treasury can draw up to Sh77 billion shillings immediately and the possibility of drawing a further amount every six months.

The combined 153 billion shillings will be available to the government until 2018.

This is the second emergency type loan facility the Kenyan government has secured from the IMF, having secured Sh62.6 billion last year.

The standby loan from the IMF is expected to support the government in the event a combination of inflation, currency devaluation and challenges in meeting balance of payments is met.

The Kenyan Government has assured the IMF treat both arrangements as precautionary, and does not plan to draw any of the funds unless both internal and external shocks to the economy persist and lead to an actual balance of payments need.

Despite the relative stability of the economy, the IMF says Kenya remains susceptible to shocks, reflecting less favorable global financial market conditions, as well as continued security threats and potential extreme weather events

“In this context, the new precautionary arrangements would provide a policy anchor for continued macroeconomic and institutional reform, and would help mitigate the impact of potential exogenous shocks if they were to materialize,” the IMF said in a statement.

Last year the Central Bank was able to increase its foreign exchange reserves and stabilize the weakening shilling without drawing from the existing standby loan.

Currently forex reserves stand at $7.33 billion, the equivalent of 4.7 months import cover, up from $7.1 billion at the end of 2015.